Key Person Life and Disability Insurance

Key Person Life and Disability Insurance

Key Employee Insurance

Most companies have at least one or more employees who are key to the success of the business. Whether it's the owner, a partner, a majority stockholder, or someone with a high level of expertise, the loss or death of that person could mean financial ruin for the company.

Key-person insurance protects your company's solvency in the event of losing a key employee or founder. Protecting your company from such potential disasters not only makes good business sense, but also, lenders and investors generally require that a business carries key-person insurance to protect their loans and investments in the company.

Many insurance companies require a company's board of directors to pass a resolution affirming the purpose of the business life insurance policy. Additionally, the key employee must be notified about, and agree to the purchase of, insurance on his or her life.

The business typically owns the policy, pays the premiums, and is the beneficiary. Most businesses purchase key-person insurance as a permanent life insurance policy; however, term life insurance may be less expensive and can be bought to cover the key person until he or she retires. The policy can be then transferred to the departing employee as a retirement benefit or to a different key person, upon the retirement of the original key person.

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Sometimes the contribution of an employee can be critical to the success of a business. It is important to plan ahead for any financial loss that may be incurred should a key person die – disruption in sales or production, cost to fill the position, or the expense of training an employee. Key Person Life and Disability Insurance is purchased by the business, which is also the beneficiary, to help reimburse the business for economic loss when a key person dies. By owning a policy on the life of a key employee, you have the following options should the employee terminate:

Surrender the life insurance policy for its cash value (may be taxable)

Keep the life insurance policy for the eventual death benefit

Allow the insured employee to purchase the life policy for its cash value or the premiums you’ve paid

Exchange the life insurance policy to insure the life of another key employee (if the policy contains a provision that allows it)

When a key employee becomes disabled the loss is experienced in two ways. The first is the loss of profits of the company that would have been attributed to that key employee. The second is the cost associated with finding a replacement for the key person. We offer you a solution to these financial problems. Key Person Disability coverage is designed to provide your business with income during the disability of that key employee.

Upon the disability of the company's key employee, the employer receives funds for the loss of that key employee. The funds can be used to replace a portion of business income or profit lost to the key employee's disability or to attract and train a replacement for the key employee

We have several different Key Person Life and Disability Insurance plans please contact us today by calling us at 866-392-INFO (4636)

Call us today for a Life Insurance quote at
866-392-INFO (4636)
We can help you determine the right type of life insurance as well as the amount of coverage right for you. Please contact us today with your questions.

The information provided is not written or intended as tax or legal advice. Our representatives are not authorized to give tax or legal advice. Individuals and business owners are encouraged to seek professional advice from their own tax or legal counsel.