The Use of Whole Life as a Business Continuity Tool (Key Person Insurance)

Key Person Insurance protects a business against the financial loss that would occur if a critical employee (CEO, top salesperson, key innovator) were to die unexpectedly. Permanent Life Insurance, particularly Whole Life, is often the most strategic choice for this purpose.

Why Permanent is Best for Key Person

• Guaranteed Coverage: The key employee may be needed for 20+ years; permanent coverage guarantees liquidity regardless of when the loss occurs.
• Cash Accumulation (Contingency Fund): The accumulating cash value can serve as a contingency fund that the business can access (via loans) if the key person leaves or the business needs capital for expansion.
• Recoupment: If the key person retires, the business can surrender the policy and recover the cash value, offsetting the premium costs paid over the years.

The policy should name the business as both the owner and the beneficiary.

Disclaimer: This content is for informational purposes only and is not financial or legal advice. The appropriate coverage amount must be carefully calculated based on the key person’s contribution to the company’s revenue.