Key Man Life Insurance


Security for your business
Key man life insurance or key person insurance, is a life insurance policy written to help a company when its survival rests on one or two critical people. This individual/individuals become the “key-man,” the life raft of the company.

The company pays the premiums and is the beneficiary if the key person dies. Key person insurance is an affordable way to protect the company from bankruptcy in the event of an untimely death of a key player within the business.  In a small company, there’s often a “one for all, all for one” mentality.

For many, the absence of office politics makes it a more pleasant, productive atmosphere. The ‘family feel’ company embraces and accommodates employee needs allowing each staff member to feel valued & remain loyal. Commonly these smaller companies rely on one or two key players to keep the business a-float so this is where the value of a key may type of policy can truly be a god send if something should happen to these employees.  

How Much Key Man Death Benefit can you buy?

The owner of a business can also be a Key Man of the company as well.  We typically write policies where we do a combo Key Man and Buy Sell together, this allows us to apply for more face amount or death benefit without having to write a separate policy with an additional policy fee cost annually.  The usual method is determined upon the annual salary or income of the key person.  Most carriers will look at writing five to ten times annual income.  So if you make $100k per year the carrier might justify and underwrite a policy for $1 million in death benefit.  Financial Underwriting guidelines are not the same with every carrier so we can help you determine which carrier will be the best to apply with.  The good news is that term life rates have been reduced drastically over the last few years and the premiums can be very affordable for the company!

If a key person passes away, the company is the beneficiary. The benefit (money) is generally used to keep the company afloat while finding a replacement, or to simplify the liquidation of the company, pay off debts, buy out the deceased shares in the company (buy-sell agreement), or split the proceeds between shareholders (often the owner’s family). A key man life insurance policy would also guarantee the employees a salary while they searched for another job. Remember, employees within a small company become an extension of your own family, they depend on you for their livelihood. Don’t they deserve to be protected?

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