Key individual insurance or key employee life insurance is essential to the survival of your company. As a business owner, developing contingency plans to ensure the continuity of your operations is a must. This is where life insurance for a key employee becomes critical, because it offers business protection if something were to happen to one of your key employees.


Could your company face the loss of a key executive or key employee? Who will lead your company when the CEO retires? What happens if your best salesperson or partner is permanently disabled? Do you have a plan?

A life insurance policy for a key individual provides you with coverage that will protect your company in the event of premature death or disability of your best salesperson, executive or even the business owner. This type of insurance offers peace mind for business owners and shareholders, providing a blanket of financial security against operational disruptions that may arise with the loss of a key employee. If a death or disability affected your company, a life insurance policy for key individuals can make the difference between success and failure.

StateTrust Life & Annuities offers the following products that can be customized to provide life insurance coverage for key individuals:

Product Name Product Type Description
Lighthouse Term Life Insurance This life insurance product provides coverage with capped premiums during the life of the policy. This plan does not include an investment component, thus offering the insured amount at the lowest available cost.
Sentinel Term Life Insurance with Return of Premium This life insurance product provides coverage with capped premiums during the life of the policy. This policy will provide financial resources to your family in case of premature death. In addition, at the end of the coverage period, you will be reimbursed all premiums paid.
Legacy Variable Universal Life Insurance This policy combines variable life insurance with universal life insurance. It is a popular product, since it provides insured parties the flexibility to invest, while enjoying the benefits of insurance coverage. This policy provides the ability to invest in the world's major capital markets and may be adapted to your present and future protection and investment needs. This product protects both the inheritance and the family estate for succession planning purposes.
Compass Index Indexed Universal Life Insurance This policy provides the policyholder with insurance coverage, as well as an opportunity to allocate investments in the S&P500. It provides a guaranteed minimum return every 24 months (primary protection), and a share percentage in this index's growth.
Global Dynamic Protection Indexed Universal Life Insurance A universal indexed life insurance plan with flexible premiums, which combines the protection of a life insurance policy with an investment component.

Who needs life insurance for a key individual?

Life insurance for a key individual is essential for a wide range of companies. Generally speaking, small and medium-sized enterprises have the greatest need for this type of insurance. These companies depend on the experience and talent of a few key individuals for their success. The loss of a key employee in a small or medium-sized company can cause operational inefficiencies that could endanger the business. Other businesses which may consider obtaining life insurance for a key individual include:

  • Companies in niche markets where replacement employees may not be readily available.
  • Companies that employ an exceptional sales person.
  • Companies with financing linked to key employees.
  • Starting businesses.
  • Companies where the business owner wants liquidity for their beneficiaries, in case of death or disability.

Benefit payments from key individual life insurance policies are often used to cover:

  • Expenses related to hiring and training a new employee to replace the key individual.
  • Losses that may arise due to errors or delays associated with less experienced/skilled employees attempting to fill the role of a key person.
  • Loans that become due as a result of the death of a key employee.
  • Business operational expenses.

The insured value is calculated based on various key elements:

  • How much was this executive contributing to company earnings?
  • The cost of undeveloped or unfinished projects, which would cease due to the death of a key employee.
  • The cost of recruiting and training a new executive.
  • The cost of future projects, which would have been developed if the key executive were alive.