What is key person life insurance and does my business need it?
Answered by 1 licensed agent
Key person life insurance is coverage a business purchases on an owner, partner, or employee whose loss would seriously impact the company.
The business typically:
owns the policy
pays the premiums
is the beneficiary
If that key person passes away, the death benefit can help the business:
cover lost revenue
hire and train a replacement
pay off business debts
reassure lenders
keep operations running during a difficult transition
Businesses that often consider key person coverage:
Small businesses with one primary producer or rainmaker
Farms with one main operator
Partnerships
Medical practices
Businesses heavily tied to one person’s relationships or expertise
A simple question to ask is:
“Would the business struggle financially if this person were suddenly gone?”
If the answer is yes, key person life insurance is probably worth discussing.
The business typically:
owns the policy
pays the premiums
is the beneficiary
If that key person passes away, the death benefit can help the business:
cover lost revenue
hire and train a replacement
pay off business debts
reassure lenders
keep operations running during a difficult transition
Businesses that often consider key person coverage:
Small businesses with one primary producer or rainmaker
Farms with one main operator
Partnerships
Medical practices
Businesses heavily tied to one person’s relationships or expertise
A simple question to ask is:
“Would the business struggle financially if this person were suddenly gone?”
If the answer is yes, key person life insurance is probably worth discussing.
Answered by Kris Moen on May 9, 2026
Agent Licensed in ND
Tags: Coverage How Life Insurance Works
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