Whole Life Insurance for Business Owners: Key Person Coverage and Executive Benefits

Whole Life insurance extends beyond personal estate planning to become a powerful financial tool for business continuity and employee retention. Business owners frequently utilize permanent coverage for two primary corporate needs: Key Person Insurance and funding Executive Benefit plans.

Key Person Insurance Strategy

A business’s success often relies heavily on a few individuals (e.g., the CEO, top salesperson, or lead innovator). Losing a key person can cause significant financial disruption. Key Person Whole Life insurance works as follows:

• The Business is the applicant, owner, and beneficiary of the policy.
• The Key Employee is the insured.
• The Benefit: The death benefit provides liquidity to cover recruiting costs, lost revenue, debt payments, and transition expenses, ensuring the business can survive the loss. The cash value component acts as a corporate asset.

Executive Benefits and Compensation

Businesses often use Whole Life to fund non-qualified benefit plans for top executives. The tax-deferred growth of the cash value is used to fund plans like a **Deferred Compensation Arrangement** or a **Split-Dollar Arrangement**, providing a valuable, tax-advantaged retirement supplement that helps attract and retain high-level talent.

Disclaimer: This content is for informational purposes only and is not financial or legal advice. Consult a qualified professional, tax advisor, or business attorney before implementing corporate insurance strategies.