Every business has people it could not easily replace, a founder, a lead engineer, a rainmaker whose relationships are the revenue. Key-person insurance exists for a blunt question most owners avoid: what happens to the business if that person is suddenly gone?
Key-person insurance is a policy the business owns on the life, and sometimes the disability, of an employee whose loss would materially harm it. The company pays the premiums and is the beneficiary. If the key person dies or becomes disabled, the proceeds give the business time and cash to absorb the shock: to recruit and train a replacement, reassure lenders and customers, and cover the revenue that walks out the door with that person.
The test is not title; it is dependency. A key person is anyone whose sudden absence would cause a real financial hit, the founder whose vision drives the company, the salesperson who personally holds the top accounts, the technical lead who is the only one who understands a critical system. Many small businesses are dangerously concentrated on one or two such people and have never named the risk, let alone insured it. Lenders and investors often notice the exposure before the owner does, and some require key-person coverage as a condition.
Coverage is sized to the cost of the loss: the expense of finding and onboarding a replacement, the revenue at risk during the gap, and any debt that would come due. It is distinct from a buy-sell, which funds an ownership change; key-person coverage funds business continuity, and a company may need both. We help identify where a business is quietly dependent on a single person and size the coverage to the real exposure, coordinated with the rest of your plan. This is general information, not personalized advice.
Insure the people the business cannot lose.