Key Person Insurance.

Protect your business from the financial impact of losing a critical employee.

Every company has people who are truly irreplaceable, the founder, top salesperson, visionary executive. If something happens, losing them could mean lost revenue, clients, or even business failure. Key person insurance helps ensure your company can weather the storm.

What It Covers

  • Death benefit payout if a key employee passes away.

  • Funds to offset lost revenue or profits.

  • Resources to recruit and train a replacement.

  • Security for creditors, investors, and clients.

Why It Matters

  • Keeps the business running smoothly during disruption.

  • Reassures lenders and investors that the company can survive setbacks.

  • Protects jobs, contracts, and company reputation.

  • Provides peace of mind for owners and employees alike.

What to Keep in Mind

  • Policies are owned and paid for by the business.

  • Coverage amounts are usually tied to revenue, profits, or the person’s unique contribution.

  • Premiums are not tax deductible, but the death benefit is usually tax free.

  • Works best as part of a broader succession and continuity plan.

Key Person Insurance FAQs

  • Typically, anyone whose loss would seriously disrupt the business: owners, executives, top sales producers, or specialists with unique skills.

  • It depends on the value of the key person’s contributions. Common methods include multiplying salary, estimating lost revenue, or factoring in replacement costs.

  • Yes. The company owns the policy, pays the premiums, and receives the death benefit.

  • Personal life insurance protects an individual’s family. Key person insurance protects the business.

  • Yes, in some cases. The company can transfer ownership to the individual or a new employer.

  • It gives them confidence that if something happens to a critical person, the business will have funds to stablize operations and repay obligations.

Buy-Sell Agreement Insurance.

Similarly to Key Person Insurance, Buy-Sell agreement secures your business’s future, and your partners’ peace of mind.

When an owner or partner leaves the business due to death, disability, or retirement, things can get messy. A buy-sell agreement backed by insurance provides the cash to buy out their share keeping the business in stable, trusted hands.

What It Covers

  • Life insurance funding for partner buyouts.

  • Disability insurance to cover unexpected exits.

  • Smooth transfer of ownership without financial strain.

  • Protection against outside parties gaining control.

Why It Matters

  • Keeps ownership in the hands of remaining partners.

  • Ensures heirs are fairly compensated without hurting cash flow.

  • Prevents disputes, confusion, or forced liquidation.

  • Builds confidence with employees, clients, and lenders.

What to Keep in Mind

  • Agreements can be cross-purchase (partners own policies on each other) or entity-owned (the business owns the policies).

  • Valuation methods (book value, earnings, appraisal) must be agreed on ahead of time.

  • Premiums are not deductible, but payouts are generally tax-free.

  • The agreement should be reviewed as the business grows.

Buy-Sell Insurance FAQs

  • A legal contract that outlines how ownership shares will transfer if an owner dies, becomes disabled, or leaves the business.

  • Because insurance provides immediate liquidity. Without it, surviving partners may struggle to raise enough money quickly.

  • In cross purchase, partners own policies on each other. In entity owned, the business owns the policies and handles the buyout directly.

  • Typically through a pre agreed valuation method like book value, a multiple of earnings, or a professional appraisal.

  • No, premiums are not deductible. But the insurance proceeds are usually received tax free.

  • Every few years, or anytime the business value, ownership structure, or number of partners changes.