Key Person Insurance

Life (or disability) coverage a business buys on a crucial employee, so the company can weather losing them.

Key person insurance is life (and sometimes disability) coverage a business buys on an employee whose loss would seriously hurt the company — a founder, top salesperson, or irreplaceable expert.

The business owns the policy, pays the premiums, and is the beneficiary. If that key person dies or becomes disabled, the payout gives the company breathing room to find and train a replacement, reassure lenders and customers, and cover the revenue gap.

Lenders and investors often require it, and for many small businesses, one or two people really do drive the whole operation — making this a practical safeguard rather than a luxury.

Life insurance →

This is a friendly general explanation, not legal or policy language. Exact coverage depends on your policy, carrier, and state. 🤝

Written and reviewed by the We Insure Things team — licensed independent insurance agents. Last reviewed July 23, 2026. Questions? Ask a licensed agent.