Key Person Insurance for the Individuals Your Business Can't Afford to Lose.

What Is Key Person Insurance?

Key person insurance is a life or disability insurance policy taken out by a business on a key employee, owner, founder, or executive — someone whose loss would significantly disrupt the business's ability to operate or generate revenue. Unlike personal life insurance, the business is typically the policy owner and the beneficiary. If the covered individual dies or becomes disabled, the policy benefit is paid to the business rather than to the individual's family.

The proceeds from a key man insurance policy can be used to help the business survive the transition — covering costs like recruiting and training a replacement, paying off business debts, fulfilling contracts, or providing financial stability to investors and lenders during a period of uncertainty. Key person life insurance and key person disability insurance are the two most common forms, and some businesses carry both to cover different types of loss.

Key person insurance is commonly used by small businesses that depend heavily on a founder or owner, professional practices where a specific individual drives client relationships, companies with specialized expertise concentrated in one or a few people, and businesses with partners or co-founders whose departure would trigger buy-sell obligations. Business continuity insurance through a key person policy is one of the more straightforward ways to reduce the risk that a single unexpected event derails everything you've built. Contact a Saint Moore Insurance Agency agent to explore your options.