Property insurance protects your building. Liability insurance protects against claims. Nothing standard protects against the sudden loss of the person whose relationships, knowledge, or leadership the business actually runs on. That's what key man insurance is built for.
A starting point based on the key person's contribution to the business.
Illustrative only, using a simple revenue-times-multiplier method. Actual coverage should also factor in replacement/training cost, personally guaranteed debt, and profit contribution — this is a conversation starter, not a final number.
Every business has someone the operation quietly depends on — a founder, a top producer, a technical expert nobody else can replace overnight. From Loudoun and Fairfax to Richmond and Henrico to Lynchburg and Danville, this is for closing that specific gap.
If the business's client relationships, vision, or day-to-day operation run through one founder, that concentration is a real and specific financial risk.
A rainmaker who brings in a disproportionate share of revenue, or a specialist whose knowledge would take years to replace, are classic key person exposures.
Most owners plan for growth constantly and plan for their own sudden absence almost never — key man insurance closes exactly that gap.
A lender can call a loan due immediately on the death of a personally-guaranteeing owner — key man proceeds can cover exactly that scenario.
Key man insurance is structured specifically around protecting the company, not the individual's family.
Unlike personal life insurance, the company applies for, pays for, and receives the death benefit directly — not the key person's family.
Commonly based on a multiple of the key person's revenue or profit contribution, replacement and training costs, or personally guaranteed debt.
The death benefit provides immediate cash to cover lost revenue, recruiting costs, and operational disruption — exactly when the business needs stability most.
Specific notice and consent requirements must be met with the insured employee before the policy is issued for the death benefit to remain income-tax-free to the business.
A life insurance policy the business owns on a critical owner, executive, or employee — the death benefit pays directly to the company if that person dies.
Businesses with concentrated leadership, top producers, or specialized employees whose knowledge or relationships would be costly or difficult to replace quickly.
Commonly estimated using a multiple of revenue or profit contribution, replacement and training cost, and personally guaranteed debt — no single formula fits every business.
Premiums are generally not deductible, but the death benefit is generally received income tax-free by the business, provided IRC 101(j) notice and consent requirements are followed.
No — they solve different problems. Key man insurance funds the operational disruption of losing a key person; a buy-sell agreement funds the ownership transfer itself. Many businesses need both.
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