Protect key figures, secure companies
The Key Person Insurance from nextsure protects your business against financial consequences in the event of key personnel being unavailable. Essential protection for stability and growth.
Ensuring financial stability
Preserve business continuity
Individual insurance solutions
What is key person insurance and why is it essential?
Protection of Key Knowledge Holders
Protection from Liquidity Shortages
Securing Creditworthiness
Maintaining Business Operations
Who is considered a key person in your company?
Key persons in a company are those employees or executives whose specific knowledge, skills, experience, or network connections are crucial for the success and stability of the business. Their sudden absence due to death, severe illness, or accident can have significant negative impacts on operations, profitability, and even the survival of the company. Typically, key persons include founders, CEOs, board members, senior developers with unique technical expertise, sales directors with excellent client relationships, or specialists in critical niche areas. Identifying these individuals is based on an analysis of their contribution to the company's success, the difficulty and cost of replacing them, as well as the potential financial loss that would result from their departure. For SMEs and start-ups, often only a few or even just one person is so irreplaceable, which makes the risk of their loss especially high and underscores the necessity of key person insurance to ensure financial continuity.
Corporate protection in focus
Tailored protection for your success factors
Risk Analysis
Identification of your key personnel and potential financial risks.
Identify Requirements
Joint determination of the optimal insurance sum for each key person.
Tariff Comparison
Transparent overview of suitable offers from leading insurers.
Digital Application
Simple and fast online completion of your key person policy.
Policy Check
Regular review and adjustment of your protection to company developments.
Claims Support
Quick and straightforward support in the event of a claim from our experts.
Partner Network
Access to specialised advisors for tax and legal matters.
B2B solutions
Individual concepts and framework agreements for companies and broker partners.
Knowledge Hub
In-depth expert articles and guides on comprehensive Key Person Insurance.
Discover our solutions for securing your key employees and ensuring business continuity.
Future-proofed
Protect your most valuable asset – your employees.
The specific benefits of key person insurance for your business
The key-person insurance provides companies with a fundamental financial safety net and numerous specific advantages that go beyond simply providing death benefits. Essentially, it protects the company against both direct and indirect financial consequences that arise from the unexpected loss of a key person. Among the most important benefits is the provision of liquid funds to offset revenue losses caused by the loss of know-how, customer relationships, or project management. Additionally, the coverage amount covers the often significant costs associated with searching for, hiring, and onboarding a suitable replacement. It can also be used to repay business loans for which the key person may have personally guaranteed or whose servicing depended on the continuation of their activity. Moreover, a key-person insurance enhances the confidence of investors, lenders, and business partners in the company's stability and risk preparedness. It is, therefore, a crucial building block for sustainable business continuity and the safeguarding of company value, especially during periods of strong growth or when there is a high dependency on individual employees.
In which situations is key person insurance indispensable?
A key person insurance is indispensable in various critical phases and configurations of a business. It becomes particularly urgent to take out when the continuation of the company depends significantly on the knowledge, skills or contacts of one or a few individuals. This is often the case with start-ups, where founders are often visionaries and main driving forces. It is also essential in established small and medium-sized enterprises (SMEs) with highly specialised employees or managers, whose absence would create an almost irreparable gap. Other situations that suggest key person insurance include: upcoming major investment projects led by a specific individual; companies with high levels of debt, where banks require collateral in the event of a key personnel failure; or firms whose business model relies on the unique innovations or reputation of a single person. The sudden death, serious illness or accident of such a key person can quickly lead to liquidity shortages, project delays, loss of trust with partners and customers, and, in the worst case, insolvency if not appropriately covered. Key person insurance serves as an existential risk buffer in these instances.
Functionality and Types of Key Person Insurance
The Key Person insurance is a type of whole life or term life insurance specifically tailored to the needs of businesses. The company itself is usually the policyholder and also the beneficiary of the insurance payout. The policy covers the life and often the working capability (e.g., through a dread disease rider) of one or more pre-defined key persons. When the insured event occurs—typically the death of the insured key person, or under extended policies, a serious illness or disability—the insurance company pays the agreed sum to the business. This sum is then at the company's disposal to mitigate the financial consequences of the loss. This includes bridging revenue shortfalls, financing the search and training of a successor, repaying debts, or ensuring ongoing projects. The amount of the insurance sum is individually calculated based on the potential economic damage that the loss of the key person would cause. The premiums are paid by the company.
Determining the Right Insurance Sum for Your Key Personnel
Determining the appropriate insurance sum for a key person insurance policy is a crucial step to ensure optimal coverage in the event of an emergency. A sum that is too low would inadequately cover the financial loss, while a sum that is too high would lead to unnecessarily high premiums. There are various approaches to calculation: a common method is the multiplier procedure, where the annual salary of the key person is multiplied by a factor (e.g. 3 to 7) to reflect the potential loss and replacement costs. Another method focuses on the key person’s contribution to company profits; here, the lost profit for a certain period (e.g. 2 to 5 years) is used as the basis. The 'Cost-to-Replace' method, which adds together all costs for recruitment, onboarding, and any temporary productivity losses until a successor achieves full performance, is also common. Additionally, liabilities where the key person plays a role (e.g. loans) should be included in the calculation. nextsure recommends a detailed analysis of the individual company situation and the specific contribution of each key person to establish a tailored and needs-based insurance sum. Professional advice can be a valuable support in this process.
Personalised Consultation
Personal, digital, and always on equal footing.
Flexible Tariffs
Precisely tailored to your needs and company size.
Quick Completion
Fully online – transparent and efficient.
Tax Aspects of Key Person Insurance: What Businesses Need to Know
The tax treatment of key-person insurance in Germany is an important aspect for businesses. Generally, the insurance premiums paid by the company can, under certain conditions, be tax-deductible as business expenses. This reduces the company’s taxable profit. Typically, the condition is that the company is the policyholder and irrevocably entitled to the insurance benefits, and that the insurance is solely business-related, serving to protect the company from the financial consequences of a key person’s absence. In the event of a claim, i.e., when the insurance sum is paid out to the company, this must be taxed as business income. Thus, it increases the company's profit in the year it is received. However, it should be noted that the payout often serves to cover increased business expenses (e.g., for recruiting, revenue compensation), which can offset the overall tax burden. The exact tax implications can be complex and depend on the specific contract design and the form of the company. nextsure strongly recommends that businesses thoroughly discuss the tax aspects of key-person insurance in detail with their tax advisor or accountant to ensure correct treatment and avoid potential pitfalls.
Key Person Insurance by nextsure: Digital, flexible, and tailored
nextsure understands the existential risks that companies face due to the loss of key personnel. That’s why we offer our Key Person Insurance, a modern, digital, and highly flexible protection solution. Our 'digital-first' approach allows you to manage the entire process from information gathering to needs assessment and completion simply and transparently online. We focus on clear, understandable information and avoid complex insurance jargon. As specialists in niche insurance, we understand the individual needs of different company sizes and industries. Therefore, our Key Person policies are not standard products; they are tailored to your specific situation and the significance of your key personnel. This includes flexible selection of the insurance sum, optional additional modules such as dread disease protection, and an adaptable term. Despite the digital focus, nextsure offers expert advice at any time to ensure you receive the optimal protection for your company. Benefit from our expertise and our unique combination of digital efficiency and personal service to secure your company sustainably.
Case Study: How Key Person Insurance Saved a Company
A medium-sized technology company, let's call it Innovatech GmbH, owed its rapid rise significantly to its chief developer, Dr Weber. She was the driving force behind several patented key technologies, which gave the company a significant competitive advantage. Innovatech's management had prudently taken out key person insurance for Dr Weber with a sum insured that reflected her estimated contribution to the company's value and the cost of a potential replacement. Tragically, Dr Weber passed away unexpectedly after a brief, serious illness. For Innovatech, this was not only a personal loss but also a massive business threat. Ongoing development projects stalled, and concerns about the company's technological future grew. Thanks to the key person insurance, however, Innovatech received the agreed insurance sum promptly. This funding enabled the company to bridge financial bottlenecks caused by project delays, commission a specialised headhunting agency with the challenging search for a successor, and offer an attractive salary package. Additionally, interim staff could be financed to keep the key projects running. Without this financial support, Innovatech might have lost strategic partnerships or, in the worst case, had to scale down operations. This example vividly illustrates how key person insurance can secure a company's survival in a crisis.
Who is the policyholder and who is the beneficiary?
The choice of the right key person policy is crucial for effective protection of your business. Begin with a thorough internal analysis: precisely identify who your key people are and the specific financial value they represent to the company. Clearly define the risks you want to insure against (death, serious illness, etc.). Then compare offers from different insurers. Pay attention not only to the price but especially to the insurance conditions. Carefully check which events are covered, what exclusions exist, and how flexible the policy is when changes occur within the company (e.g. the key person leaving). The insurance sum must be calculated according to needs – here, the methods mentioned in the section 'Determination of the right insurance sum' will help. Also, consider the reputation and financial strength of the insurer as well as the quality of customer service, especially in the event of a claim. At nextsure, we value transparency and offer you digital tools as well as personal advice to support you in choosing the optimal key person policy. Don’t hesitate to seek expert advice to make an informed decision that protects your business in the long term.
