What Is Key Person Life Insurance? 

Many businesses often depend on a few key individuals whose expertise, leadership, or client relationships are vital to daily operations. The unexpected loss of such a person can disrupt your business and threaten its future. That’s where key person life insurance can offer a strategic way to help protect your company from financial setbacks if a crucial team member passes away.

Understanding Key Person Life Insurance

Key person life insurance, sometimes called business life insurance or executive insurance, is a policy a business takes out on an employee who is essential to its operations. The business owns the policy, pays the premiums, and is the beneficiary. If the insured key person dies, the company receives a death benefit that can be used to cover lost revenue, recruit and train a replacement, or manage other financial obligations during a difficult transition.

Who Needs Key Person Insurance?

Key person insurance may be beneficial for businesses that rely heavily on one or more individuals for their success. This may include:

• Owners or founders
• Top executives or managers
• Employees with specialized skills or client relationships
• Anyone whose absence would significantly impact business continuity

Benefits for Illinois Businesses

When evaluating key person insurance, it’s important to consider each key employee, the appropriate coverage amount, and how the policy fits into your overall risk management strategy. Illinois businesses should also be aware of any state-specific regulations or tax implications related to business-owned life insurance.

How We Can Help

Illinois Insurance Family works closely with you to identify your most valuable team members, determine suitable coverage, and ensure your business is prepared for the unexpected. To learn more about financially protecting your business with key person life insurance, contact us today.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.