Key Person Insurance in Canada for Businesses

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Protect your business with key person insurance

Every business has a select few people who are the cornerstone of the operation. They are people you’d consider indispensable. This could be the founder, CEO, manager, or a top employee. Losing these individuals could significantly hurt your business on many levels, especially financially. Even though you may not be able to prevent the loss of a top person, key person insurance can help reduce the impact on your business.

Our commercial insurance experts can help you compare key person insurance policy quotes. We’ll ensure you select a policy that meets your business's unique needs.

Key takeaways about key person insurance for your business

Key person insurance is a life insurance policy for your business.
Get financial protection if you lose a key member of your organization (owner, partners, stakeholders, top employees).
Key person insurance is ideal for all sizes of businesses.

What is a key person?

A key person is an individual who is considered irreplaceable by the business without a significant dropoff. This can be an employee, stakeholder, partner, or business owner. You are considered a key person because you offer something to the business that cannot be duplicated. This could be expert knowledge, a specific skill set, an understanding of operations or other intangible assets. A key person is someone who would be very difficult to replace if they left the organization.

What is key person insurance?

CEO staying in hotel room on business trip.

Key person insurance is a policy that helps protect a business from potential financial losses caused by losing a key member of its organization.

It's a type of life insurance for businesses. If a key person were to become ill, pass away, or can no longer work, the company would receive an insurance payment to help with the costs associated with replacing them. The money can be used to recruit and train new employees, pay off debt, adjust operations, and cover other expenses.

Insurers may refer to key person insurance as:

Key person life insurance
Business life insurance
Corporate-owned life insurance
key employee insurance
Key man insurance

This type of policy exists in addition to your standard business insurance coverage.

How does key person insurance work?

a senior businessman in a suit is standing in front of a conference room.

Key person insurance is a security blanket if you lose a top employee. If a key person leaves because they pass away, are diagnosed with a serious illness, or becomes disabled and can no longer work, you will receive pre-defined financial payments to the company.

The policy only applies to individuals who your insurer recognizes as key persons. So, your company must submit proof to establish an individual as a key person. You can’t arbitrarily name an individual or assign people as a key person without the approval of your insurer.

Here are the steps you’ll need to complete to set up this coverage:

You set up a key person life insurance policy for specific employees.
Your business is named as the beneficiary.
Coverage is activated if a covered event occurs (passing, illness, inability to work) for one of the named employees in the policy.
The business files a claim.
The business receives a benefits payout from the insurer.
The business can use these funds to cover costs associated with losing the employee.

What does key person insurance cover?

The benefits payout from key person insurance can be used to cover the costs of replacing an individual who was vital to your business. It can help cover the costs of the following:

Recruit new employees
Train and upskill existing employees
Supplement lost revenue
Pay off loans
Cover the costs of other business expenses related to losing a top person

Types of key person insurance policies

Key person business insurance coverage is typically available in one of three types of life insurance:

Term or permanent life insurance: If you have term life insurance or permenant life insurance you receive a payout if a key person passes away.
Disability insurance: Receive a payout if a key person becomes disabled and unable to work.
Critical illness insurance: Receive a critical illness insurance payout if a key person has a critical illness and can no longer work.

How to get key person insurance quotes

Our commercial insurance brokers can help you quickly compare coverage options. Follow these simple steps:

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Kevin St Clair

2024-11-28

Betsy was a genuine pleasure to deal with considering the circumstances. Thanks again for all your help

Anthony Gomez

2024-11-27

Today, I want to take a moment to recognize Monica Chan, an exceptional insurance broker who has consistently gone above and beyond in her service to me. Monica's dedication to punctuality and consideration has been truly remarkable. She has always been prompt in responding to my inquiries and has never hesitated to offer her expertise and guidance. With Monica as my broker, I have never once felt worried about anything going wrong. Her proactive approach and attention to detail have provided me with peace of mind, knowing that my insurance needs are well-taken care of. Throughout our interactions, Monica has been incredibly helpful, patiently explaining complex insurance concepts and ensuring that I fully understand my coverage options. I wholeheartedly recommend Monica Chan to anyone seeking an insurance broker who genuinely cares about their clients' best interests. Her commitment to excellence and her willingness to go the extra mile make her an invaluable asset in the insurance industry.

Phyllis Baker

2024-11-20

Absolutely amazing service the broker Todd worked on my quote fast I recommend this company to anyone very professional I’m so glad I called them .. Thank you for your great work

Charles Cameron

2024-11-15

Betsy Bannon has been nothing short of amazing at helping us through the complex process of acquiring business insurance. She quickly understood our needs and expertly guided us to the right solution. From start to finish, she made us feel like her most important client which gave us the confidence that we were in great hands. We highly recommend Betsy!

Jermaine M

2024-11-05

I had a great experience with Patrick Vuong. He went above and beyond to help me update last minute changes to my policy in order to qualify for a government grant. Staying back late and coming in early the next day to help finishes the changes. Very kind and professional!

Mark Gaffney

2024-11-05

Betsy Bannon is a professional extremely friendly and knowledgeable and made my experience wonderful! Highly recommend her for any insurance needs. Mark Gaffney

fabian ward

2024-11-04

Great service! Prompt and very helpful! Thanks to Todd allan for really helping me out!

Stephen Mcfadden

2024-11-01

Great experience working with Sohel Rahman, appreciate his honest and can-do attitude. Highly recommend!

How much does key person insurance cost?

The cost of key person insurance can vary greatly based on the company size, policy type, individual insured, and many other considerations. Speak with our business insurance experts to get a detailed quote.

What factors affect key person insurance rates?

Here are the main factors that will determine your premiums:

The type of coverage and policy
The benefit amount
The key person's age, gender, and health status
Company size
Business type and industry

Key person insurance FAQs

How much key person insurance do I need?

The amount of coverage you need will vary based on your business. Some of the top considerations for determining your policy needs include determining how much the named key person is worth to the company, the cost to replace them, and how much revenue they generate. Each key person can have a different valuation. This will affect your coverage needs. Speak with our brokers to assess your needs.

What does key person insurance not cover?

You will not receive the key person insurance benefit if they choose to leave the company to work for another business or retire. There may be other omissions in your policy. Ensure you know what is and is not covered in this type of policy. Speak with our brokers if you need clarification.

Do you need key person insurance for small businesses?

Key person insurance can be beneficial for all business sizes. Many SMBs have key person coverage for the company owner and top employees. It’s a great supplemental policy that can work in unison with small business insurance to financially protect your business.

Is key person life insurance tax deductible?

No. This type of insurance is not tax deductible.

Get a key person insurance quote

Find the best key person insurance policy for your business. We offer many options regardless of your industry or the type of policy you need. Get a quote today and save more! Call toll-free 1-855-550-5515 or request a quote online.

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Key Person Insurance

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