Maintain Business Continuity with Confidence
Your top people aren’t just employees — they’re the engine of your business. If a key partner, founder, or top employee suddenly passes away or becomes critically ill, would your company be financially prepared?
Key Person Insurance is a life or critical illness insurance policy that a company purchases on the life of an essential team member. If that person dies or becomes seriously ill, the business receives a tax-free lump-sum payout to:
-
Cover the cost of recruitment and training
-
Replace lost revenue
-
Reassure lenders, investors, and clients
-
Keep operations stable during transition
Who Is a “Key Person”?
-
A founder or co-owner with unique knowledge or capital
-
A top sales producer who drives significant revenue
-
An executive managing core operations or relationships
-
A technical expert whose knowledge can’t be quickly replaced
How Does Key Person Insurance work?
-
The business is the owner and beneficiary of the policy
-
Premiums are paid by the company (not the employee)
-
If a claim occurs, the company receives the payout to support continuity
-
Funds can be used for whatever the business needs, no restrictions
Is Key Person Insurance right for you?
It may be an ideal choice if you:
-
Rely on one or two key individuals to drive revenue or strategy
-
Want to protect your business from disruption or client loss
-
Need to reassure investors, lenders, or partners of your stability
-
Lack a backup plan for sudden leadership or talent loss
Ready to Get Started?
Our Services
Free Consultation
Get your answers
The business both owns the policy and is the beneficiary. This ensures the company receives the funds directly when they’re needed most.
In most cases, life insurance premiums are not tax-deductible. However, the payout is usually received tax-free.
Coverage is typically based on the key person’s role, their financial impact on the company, and the potential cost to replace them or manage a transition.
Yes, in most cases. The insured individual will typically need to go through medical underwriting, including health questions and sometimes labs or exams, depending on the amount of coverage.
There are no restrictions. The business can use the funds for hiring replacements, stabilizing cash flow, covering lost revenue, repaying loans, or providing reassurance to stakeholders
If the insured person leaves, the policy can often be reassigned, canceled, or repurposed.
Still Have Questions?
Disclaimer: The information contained in this article is provided for general informational purposes only and does not constitute financial, legal, tax, or investment advice. While we strive to ensure that the content is accurate and up to date, Safe Horizon Financial makes no guarantees regarding its applicability to your individual circumstances. Readers should consult qualified professionals (such as a licensed financial advisor, accountant, or lawyer) before making decisions based on the information presented. Safe Horizon Financial is not responsible for any actions taken or not taken as a result of this content.