Business continuity
Funds to steady operations after a loss.
Executive benefits & key person life
Protect the business from the loss of a key leader.
Key person life insurance can help a business manage the financial impact if an owner or essential employee dies. Executive benefits can help attract and retain leadership. Both should be designed with your legal and tax advisors.
- Business-owned coverage
- Continuity planning
- Coordinated with your advisors
The basics
What key person coverage does.
When one person drives revenue, relationships, or operations, their loss is a business risk.
With key person life insurance, the business typically owns the policy, pays the premiums, and is the beneficiary on the life of an essential person. The benefit can help cover lost revenue, recruiting a replacement, or repaying debts.
Executive benefits may include supplemental life or disability coverage for leaders, or arrangements designed to help with retention. These involve legal and tax considerations and should be structured with qualified advisors.
Life insurance can also be one part of a buy-sell arrangement among business owners, which requires a legal agreement drafted by an attorney.
Needs it may address
Business risks it may help address.
Replacing a leader
Costs of recruiting and training a successor.
Retaining talent
Benefits that help keep key people.
How it works
How it’s typically set up.
Identify key people
Who the business would struggle to replace.
Estimate the financial impact
Revenue, debts, and replacement costs.
Coordinate with advisors
Ownership, beneficiary, and tax treatment set up with your CPA and attorney.
Apply and review
Underwriting on the insured, then periodic reviews.
Key features and important limitations
Key features
- The business can own the policy and receive the benefit.
- Can support continuity and succession planning.
- Can be coordinated with buy-sell arrangements.
Important limitations
- Notice, consent, and reporting rules apply to employer-owned life insurance — consult your advisors.
- Premiums are generally not tax-deductible; tax treatment depends on structure.
- The insured must qualify through underwriting.
- Own a business that depends on one or a few key people.
- Have business partners and are considering a buy-sell plan.
- Want to strengthen benefits for leadership.
Questions
Common questions
Who owns a key person policy?
Typically the business owns the policy, pays the premium, and is the beneficiary. Specific structures should be reviewed with your legal and tax advisors.
Does the insured employee need to consent?
Employer-owned life insurance generally requires notice to and written consent from the insured employee before the policy is issued, among other requirements. Your advisors can confirm what applies.
Next step
Plan for the unexpected in your business.
Start a conversation about key person coverage and how it fits with your advisors’ plans.
Talk directly with Cameron McClendonLicensed Insurance Agent
Not ready to book? Send a message
Prefer email? cameron@mcclendongroup.net
General, educational information only — not legal, tax, or compliance advice. Plan availability, participation and contribution requirements, eligibility, underwriting, and costs vary by carrier, group size, industry, and location. Coverage is subject to the group policy. Employers should consult their own legal and tax advisors about plan design and compliance obligations. McClendon Benefits Solutions is the business name of Cameron McClendon, a Texas-licensed General Lines Agent (Life, Accident, Health and HMO), license #3253199.
MBS does not provide legal or tax advice. Buy-sell agreements and executive benefit arrangements should be drafted and reviewed by a qualified attorney and tax professional.