Key Person Insurance
Key Person Insurance is designed to support your company through the financial difficulties it experiences when losing an employee whose contribution to the company cannot easily be replaced. A key person could be the owner-operator of a small business, or the CEO of a major corporation, whatever the role, the company will suffer in their absence. The policy premiums are paid by the company, which is the beneficiary, and generally covers the key person with some combination of life, illness and disability insurance.
The benefits payable from a key person insurance plan could help your company with recruiting or training a replacement, paying off debts and reducing financial burdens following the loss of a key person, or reassuring employees, customers and investors.
A key employee is one of your company’s most valuable assets. Let’s make sure their absence is financially covered.
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Safeguarding Profits
A firm can reduce lost revenue by postponing or terminating any commercial initiative involving key employees.
Protection for Partnership or Shareholder Interests
Key Person coverage enables the surviving owners, partners, or shareholders to meet the financial objectives of the company.
Business Loans and Account Coverage
Involving company accounts or loan holders will have protection against the key person's absence.
How we work
Step 1
Complete Application
Step 2
Receive an Instant Quote
Step 3
Purchase Policy Online
FAQ
What is Key Person Insurance?
Key Person Insurance is a type of insurance that a company can purchase for a owner, a top executive, or a worker who is deemed crucial to the company’s continued success (known as a key person). The firm receives tax-free dividends in the case of a key employee’s serious sickness or incapacity.
Why do I need Key Person Insurance?
Key Person Insurance is important because it is an injection of capital into a business when they need it the most. Significant losses often arise when an important individual in an organization is no longer present. Especially in a smaller business where a few key people are responsible for a major portion of the revenue and operations.
Also, revenues and activity disruption are often significantly disrupted when a prominent employee leaves a company due to death or a severe illness. Additionally, the company’s creditors and investors can be alarmed and pressure the company into liquidation. At its worst, the company could struggle to continue operating.
Obtaining Key Person Insurance is a helpful risk management strategy known as risk shifting that transfers risk to a different party (the insurance company). It can mitigate the adverse effects of losing a key employee in the company. The corporation acts as the policy’s beneficiary and pays the necessary insurance premiums as required.
How does Key Person Life Insurance Work?
The business is the sole beneficiary of a key person insurance policy purchased by a corporation to insure the life of a significant person or key employee.
If the insured person accepts the terms of the policy, the corporation will get the life insurance payout of the insured person and will pay the insurance costs.
The payout will go towards appointing and training a replacement employee for the key person’s death, paying outstanding loans, or covering expenses.
If the business owner decides to close, the life insurance proceeds to pay the workers’ severance benefits.
How much does Key Person Insurance Insurance cost?
The Key Person Insurance cost can vary based on factors including:
- Insured’s Details (Age, Health, etc.)
- Policy Terms and Limits
- Specified Coverage
- Whether the company purchased term life or permanent life policy
- and more
Complete your online application and get a free quote within minutes! It does not cost anything or require you to proceed with the coverage once a quote is provided.
Is Key Person Insurance tax deductible?
Typically, no. Key Person Insurance is considered personal coverage and not tax-deductible to an owner, or the business itself.
What is the difference between Key Person and Life Insurance?
They are usually the same thing. Key Person Insurance is Life Insurance for a key person in a company whose absence would severely impact the business’s finances or operations.
Do small businesses need Key Person Insurance?
Yes. Key Person Insurance is often more important when a business is in its beginning and growth stages. It would be difficult for a small business partnership to survive if a key person who was responsible for driving a major portion of the company’s revenue, was no longer there.
