Why Buy Key Man Life Insurance? 
Most companies have at least one person -LRB- e.g. the owner of the company -RRB- who 's loss can have a substantial impact on the business ' revenue . Upon this `` key-person 's '' death , someone else must be hired to carry on the same tasks performed earlier . Many company owners therefore insist on buying life insurance coverage to minimize the risk , and many lenders require that the business carry life insurance on the key person to protect their loans and investments in the company . The business would generally own the policy , pay the premiums , and be the beneficiary . Key person policies are often used to support a buy-sell agreement between business partners with the proceeds structured to purchase the deceased partner 's shares or interests in the company - the agreement would typically mandate that the deceased partner 's estate sell it 's stock to the remaining partners/shareholders and that the partners/shareholders purchase the interest for a specified price -LRB- theprice should help establish the value of the business for estate planning purposes -RRB- . 