What Is Key Person Life Insurance? 

For many businesses, success and stability depend on certain essential individuals whose expertise, leadership or client relationships help drive the company forward. But what would happen if one of these key people were suddenly unable to work due to death or serious illness? Understanding how key person life insurance can provide crucial protection for your company’s future is critical.

Understanding Key Person Life Insurance

Key person life insurance is a type of policy a business takes out on a vital employee, owner, executive or other stakeholder. The company pays the premiums and is the beneficiary of the policy. If the insured key person passes away, the business can submit a claim for a payout that can help cover resulting financial losses and costs.

Why Is Coverage Important?

Losing a key team member can have a significant impact on daily operations, revenue, and long-term plans. Specifically, a suitable policy may assist with the following:

• Offsetting lost income or profits resulting from the absence of a key employee
• Covering the costs of recruiting and training a replacement
• Paying off business debts or protecting credit lines
• Providing stability and confidence to employees, clients and stakeholders

Who Should Consider Key Person Life Insurance?

Generally, any business that relies on specific individuals for continuity and functionality should strongly consider purchasing key person coverage. This may include policies for those in leadership positions, staff with unique technical skills or salespeople who maintain crucial client relationships. In many cases, small businesses, family-owned companies and organizations with specialized roles that would be difficult to fill quickly should be particularly mindful of coverage needs.

Protect Your Business’s Financial Security

If you want to financially safeguard your company against the loss of a key member, our team is here to help. Contact us today to learn more about key person life insurance and how we can support your business’s long-term success.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.