Best Key Person Insurance

Keeping your business running if a top executive dies

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Individuals buy life insurance to financially support their loved ones after their death, and key person insurance offers similar protection for an organization. Key person insurance is a life insurance policy that a company purchases for the business owner or a leading executive. If that person dies unexpectedly or becomes disabled, key person insurance provides compensation to keep the business running until they replace the executive or close shop.

Purchasing key person insurance is similar to buying individual life insurance, and there are a number of key person insurance providers on the market. To help you find the best keyman insurance company, we reviewed more than a dozen providers and evaluated each one based on policy options, price, available riders, ease of use, and financial strength. We settled on a list of six insurance providers that offer the best key person insurance.

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The Best Key Person Insurance for 2021

Best Overall : Lincoln Financial


Lincoln Financial

 Lincoln Financial

Lincoln Financial offers high-limit, comprehensive key person insurance coverage for employees and executives, which is why it’s the best overall.

Pros
  • Many different policies available with high coverage limits

  • Option to customize your coverage with riders for added protection

  • Below average NAIC company complaints

Cons
  • Policies can be expensive depending on the amount of coverage needed

  • No option to get an instant quote online

We chose Lincoln Financial as the best overall key person insurance provider because of the company’s robust coverage options, high coverage limits, great financial strength, and longstanding experience in the life insurance industry.

Lincoln Financial offers term life insurance, universal life insurance, indexed universal life insurance, and variable universal life insurance that can be written as a key person insurance policy. There are several riders available, including a change of insured rider and a total disability rider, which can be added to any permanent life insurance policy. 

With key person insurance from Lincoln Financial, you can use the death benefit to supplement business income, pay off loans, and fund company transitions when the insured individual passes away. The proceeds can also be used to recruit and train a replacement if the business continues to operate.

One of the downsides of Lincoln Financial is that the policies tend to be expensive, especially if your company needs a high amount of coverage. You’ll need to contact an agent directly in order to get a quote.

Lincoln Financial was founded in 1905 and is one of the largest life insurance companies in the country. It has an A+ rating from AM Best, indicating superior financial strength.

Best for Small Businesses : AIG Direct


AIG Direct

 AIG Direct

AIG Direct offers affordable life insurance policies with flexible term limits, and a variety of online resources to help small businesses navigate their key person insurance needs.

Pros
  • Term, permanent, and guaranteed issue life insurance policies available

  • Helpful online resources and calculators for first-time life insurance buyers

  • Choose from several different riders for more protection

Cons
  • Negative BBB reviews citing long policy approval times and poor customer service

  • No option to get an instant quote online

AIG Direct is our top recommendation for small businesses that are in the market for key person insurance. The company offers low-cost term and permanent life insurance coverage, with flexible policies that make it easy to adjust your coverage as your business grows. 

AIG Direct’s term life insurance policies are available in term lengths up to 30 years, with five-year increments, and up to $2 million in coverage. If you are looking for long-term protection, AIG Direct also offers permanent life insurance, whole life insurance, and accidental death insurance, as well as riders for specialized protection.

If your business is purchasing life insurance for the first time, you can take advantage of AIG Direct’s online resources to learn what to expect when you apply for life insurance, how the medical exam works, how to calculate your coverage needs, and more.

Requesting a key person life insurance quote from AIG Direct is easy, but you won’t be able to get an instant rate estimate online. When you fill out the online form, your request gets sent to an agent who will reach out via phone or email. 

AIG Direct was founded in 1905. It’s a subsidiary of AIG and was created to help individuals and businesses purchase affordable life insurance on their own terms.

Best for Self-Employed : Haven Life


Haven Life

 Haven Life

Self-employed individuals have different life insurance needs, and Haven Life makes it easy to find affordable term life insurance coverage that will cover your business and your family if the unexpected happens.

Pros
  • Policies are affordable, even for a high amount of coverage

  • The online application process is quick and easy

  • Term life insurance coverage is available up to $3 million

Cons
  • Only offers term life insurance policies

  • Doesn’t offer any riders for additional coverage

Self-employed business owners are often sole proprietors, which means finding an affordable policy is essential. Haven Life is the best key person life insurance company for self-employed individuals because the coverage is cheap, easy to get, and straightforward. 

Haven Life’s term life insurance policies offer enough protection to cover the unique business and familial risks that self-employed individuals face. Policies are available for individuals between 18 to 65, with 10-, 15-, 20-, and 30-year terms, and coverage from $100,000 to $3 million. 

If you were to pass away unexpectedly, a term life policy from Haven Life would cover outstanding business expenses and loans, so your loved ones wouldn’t become responsible for paying back your company’s debts.

To get life insurance without a medical exam, you can apply for a Haven Simple policy, which is Haven Life’s take on simplified issue term life insurance. The company also offers a few unique policy options, like Haven Salary Protection.

Haven Life was started in 2014, is owned by MassMutual, which is the company that underwrites its policies. The company has an A++ financial strength from AM Best.

Best for Disability Coverage : Guardian


Guardian

 Guardian

Guardian is the best key person insurance company for disability coverage, which will pay for lost income, operations expense coverage, and more if a key employee becomes disabled and is unable to work.

Pros
  • Specializes in disability coverage for business owners

  • Use the online disability income calculator to help you choose coverage

  • Policies available with high coverage limits

  • Below-average NAIC company complaints

Cons
  • Have to purchase a policy through an agent

  • No coverage limits available on the website

Based on our research, Guardian Life Insurance is the best key person insurance company for disability insurance. The company offers short-term and long-term business owners disability insurance policies that include personal income protection, coverage for routine business expenses, business loan protection, and consolidation. Guardian also offers a non-cancelable rider, guaranteed-renewable rider, residual benefits rider, and a future benefits increase rider.

Guardian sells individual disability insurance policies and supplemental insurance policies. If your company already provides disability coverage as an employee benefit, a supplemental policy can increase the coverage limits for a key executive and other high-earning individuals.

To get a key person disability insurance quote from Guardian, just use the free online form. You can also check out the coverage calculator to figure out how much disability insurance your key employees need, based on their age, profession, health history, and income. 

Guardian was founded in 1860. It was initially formed as a mutual company, and since 1868, it has paid annual dividends to its policyholders. As of 2019, Guardian had $699 billion in life insurance policies in force, and it has an A++ financial strength rating from AM Best.

Best for Term Life Coverage : Mutual of Omaha


Mutual of Omaha

Mutual of Omaha

Business owners who are looking into a key person term life insurance policy should consider Mutual of Omaha, which has low-cost coverage, generous policy limits, and a number of riders for customized coverage.

Pros
  • Certain life insurance policies are available for seniors

  • Easy to get an instant rate quote online

  • Offers a long list of riders for extra coverage

Cons
  • High number of NAIC company complaints

  • Must work with an agent to make changes to your policy

Mutual of Omaha is the best key person insurance company if you’re looking for term life coverage for a business owner or executive. Not only are the policies affordable, but you can choose your coverage limits based on your company’s unique needs and risks. Mutual of Omaha’s term life insurance policies include a fixed premium and a guaranteed death benefit.

With a policy from Mutual of Omaha, you can choose a term limit of 10-, 15-, 20-, or 30-years, with $100,000 in coverage or more. Mutual of Omaha will issue policies to key executives who are between the ages of 18 to 80, which makes it a good option for companies with older employees.

To get a quote from Mutual of Omaha, you can use the online form or contact an agent directly. The company also has a free coverage calculator which can help you figure out how much coverage is right for your key employees. 

Mutual of Omaha was founded in 1909. The company began selling coverage in 48 states in 1939, and has been a leading life insurance provider ever since. Mutual of Omaha has an A+ financial strength rating from AM Best.

Best for Customizable Coverage : Prudential Financial


Prudential

 Prudential

Prudential Financial offers a long list of unique riders for added protection, which is why it’s our top pick for customizable key person insurance coverage.

Pros
  • Offers a variety of endorsements to fill gaps in basic coverage

  • Has several online tools and resources to help you compare coverage options

  • Easy to get an instant rate quote online

Cons
  • Policies can be expensive

  • Most policies require a traditional medical exam

Prudential Financial’s key person insurance is highly customizable, which is why we recommend it for businesses that want to add riders or endorsements to their policy. There are riders for critical illness, disabilities, a waiver of monthly deductions, accidental death benefits, overloan protection, and more.

Prudential Financial offers a few different life insurance policies, including term life insurance, universal life insurance, indexed universal life insurance, and variable indexed universal life insurance. Riders can be added to any permanent policy for enhanced coverage. 

Getting a quote from Prudential Financial is quick and easy. You can fill out the online form, provide some basic information about yourself and your health history, and see how much you can expect to pay. Keep in mind that Prudential Financial’s policies tend to be more expensive than some of the other providers we reviewed.

Prudential Financial was founded in 1875. Today, Prudential Financial sells a number of different insurance, financial, and retirement products to individuals and businesses around the world. The company has an A+ rating from AM Best, indicating superior financial strength. 

Final Verdict

Every key person insurance provider has pros and cons. For example, Haven Life offers extremely affordable coverage, but it only sells term life insurance. Prudential Financial has the most options if you want to customize your policy, but you’ll pay a higher premium for it. Guardian has great disability coverage, but you need to pass a medical exam in order to get a policy.

Based on our evaluation, Lincoln Financial is the best overall key person insurance provider. The company sells robust life insurance through a variety of policies with high coverage limits, and several riders for more protection. Lincoln Financial also has great financial strength and more than 115 years of experience selling life insurance.

Compare Providers

Company Wins For Key Feature
Lincoln Financial Best Overall Variety of policies available with high coverage limits
AIG Direct Best for Small Businesses Online resources geared toward first-time life insurance buyers
Haven Life Best for Self-Employed Affordable coverage with flexible term lengths
Guardian Best for Disability Coverage Online coverage calculator helps you determine your disability coverage needs
Mutual of Omaha Best for Term Life Coverage Term life policies are available for applicants up to age 80
Prudential Financial Best for Customizable Coverage Offers a number of riders for tailored coverage and personalized protection

Frequently Asked Questions

What Is Key Person Insurance?

Key person insurance is a type of life insurance policy that covers a business owner, a high-ranking executive, or another employee who is critical to a company’s operations and revenue. Key person insurance is sometimes called “keyman insurance” or “business life insurance.” Typically, businesses buy term life insurance as their key person policy because it offers coverage for a limited amount of time.

How Does Key Person Insurance Work?

With keyman insurance, an organization buys life insurance for a key executive and is the owner and sole beneficiary of the policy. The company is also responsible for paying the premiums and receives the death benefit when the insured individual dies. Before a company can purchase key person insurance, the insured individual must agree to the policy.

The death benefit from a key person insurance policy can be used in a number of ways, including hiring and training a new business leader, making business loan payments, and giving employees severance pay if the company decides to close down. 

How Much Does Key Person Insurance Cost? 

The cost of key person insurance depends on several factors, including the type of coverage you need, the amount of coverage you purchase, and the insured individual’s age and overall health. Term life insurance policies are usually cheaper than permanent life insurance policies. Additionally, young and healthy individuals are less expensive to insure than older people or individuals with a history of health issues. 

Who Needs Key Person Insurance?

Not every company needs key person insurance. Key person insurance is beneficial if losing an executive or employee would have a significant financial impact on your company. This is often the case with small businesses, for example, whose owner might handle most of the bookkeeping, hiring, sales, client relationships, and so on. 

Is Key Person Insurance Tax Deductible?  

It is a common misconception that key person insurance is tax deductible. If you have a key person insurance policy, you are not allowed to deduct the cost of the premium from your federal income tax. According to IRS regulations in section 1.264-1, you cannot deduct the cost of life insurance for you, an employee, or any individual with a financial interest in your company, if you are the beneficiary on the policy. Life insurance premiums are not considered to be a necessary or ordinary business expense, and must be paid for out-of-pocket. 

How Much Key Person Insurance Coverage Do I Need?

Every business needs a different amount of key person insurance coverage. To determine your key person insurance needs, consider the executive’s responsibilities. If they play a major role in the company’s daily operations, sales, or new business, their absence could have a serious impact on the bottom line. On the other hand, a business owner who is mostly hands-off may not need as much coverage. Some key person insurance companies have a coverage calculator which can help you determine an appropriate amount of coverage.

How We Chose the Best Key Person Insurance

To find the best key person insurance, we did a deep-dive into 15 providers that offer this type of coverage and evaluated each company’s policy options, premiums, riders, financial strength ratings, customer service, and online resources. Additionally, we looked for companies that had many decades of experience selling life insurance and are licensed to sell life insurance policies in almost every state.

Article Sources

Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. AM Best. "The Lincoln National Life Insurance Company." Accessed March 9, 2021.

  2. Business Wire. "AM Best Affirms Credit Ratings of Mutual of Omaha Insurance Company and Its Subsidiaries." Accessed March 9, 2021.

  3. Business Wire. "AM Best Affirms Credit Ratings of Prudential Financial, Inc. and Its Subsidiaries." Accessed March 9, 2021.