Colorado Key Person Insurance

Learn how your company can withstand the financial impact of losing valuable employees.

Written by Meg Stefanac
Written by Meg Stefanac

Financial blogger and business owner, Meg Stefanac, has more than 15 years experience working in the financial services industry and enjoys helping individuals make solid financial decisions. Meg has extensive experience writing about insurance and finances and is a key contributor to

Reviewer: Jeffrey Green Reviewed by Jeffrey Green
Reviewer: Jeffrey Green
Reviewed by Jeffrey Green

Jeff Green has held a variety of sales and management roles at life insurance companies, Wall street firms, and distribution organizations over his 40-year career.  He was previously Finra 7,24,66 registered and held life insurance licenses in multiple states. He is a graduate of Stony Brook University.

Colorado Key Person Insurance

According to the National Association of Insurance Commissioners, approximately 71% of all small business owners surveyed state that the success of their business was very dependent on one or two key people, However, only 22% of these companies have invested in key person insurance.

Key person insurance is an often-overlooked business insurance product, but it is one that many companies in Colorado may find quite beneficial. If you would like to learn more about this coverage, you can talk to a local independent insurance agent.

What Is Key Person Insurance?

Key person insurance is coverage that is designed to protect the financial interest of companies that rely on the expertise or reputations of one or more key people in the event that they pass away unexpectedly or are incapacitated in some way.

Depending on the insurance company you are working with, this coverage may be referred to as the following.

  • Key person life insurance
  • Key employee insurance
  • Life insurance for key employees
  • Key man life insurance
  • Corporate owned life insurance (COLI)

This insurance can make up for the financial hit your company may take in the absence of important team members.

What Makes Someone a Key Employee?

Ideally, every person who works for your company is valuable and important. However, when thinking about key person insurance coverage, you will need to consider if you have any employees that provide a unique and irreplaceable service.

These people can include the following.

  • Company owners and founders
  • Visionaries who keep the company moving forward
  • People who serve as the “face of the company” on whom your company’s reputation is dependent
  • Highly talented workers with rare skillsets

Basically, if a certain employee’s absence would result in major financial losses to your company, you may want to consider purchasing key person life insurance on them.

Is Key Person Insurance Permanent?

How long your key person insurance will last depends on the type of policy you purchase. If you purchase a whole (permanent) life policy on your key employees, this coverage will last for as long as you continue to pay your premiums.

However, most businesses that are buying key person life insurance opt to purchase temporary term life policies for two reasons.

  • They only need these policies to stay in effect until the person(s) being insured retires.
  • Term life policies are much less expensive than whole life policies.

A local independent agent can help you review your coverage options and can obtain customized quotes for both whole and term policies.


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How Much Does Key Person Insurance Cost in Colorado?

There is no way to give an average cost of key life insurance because so many different factors go into calculating the premiums. These include, but are not limited to the following.

  • The number of key employees you are insuring
  • How much coverage you are purchasing
  • The type of policy you are purchasing (e.g., term life, whole life, universal life)
  • Whether you are including disability coverage in your policy
  • Details about the person(s) you are insuring including their age, sex, occupation, health history, and use of tobacco products

The only way to find out how much key person insurance will cost for your Colorado business is by requesting customized quotes.

Independent insurance agents can save you time and money by contacting a few competing insurers on your behalf. That way, you can compare rates to ensure that you are not overpaying for your coverage. 

What Does Key Person Insurance Cover?

Key person insurance covers your business if the named insured dies while the policy is in place. If you have purchased key person disability insurance as well as key person life insurance, cases where your key person becomes too incapacitated to work will also be covered.

Your company will receive funds in the amount of the policy you have purchased. These can be used to cover lost profits, onboarding a replacement employee, or closing out your company if necessary.

What Does Key Person Insurance Not Cover?

As with any insurance policy, key person insurance has some exclusions. Claims can be denied due to the following.

  • Fraud or intentional dishonesty
  • Deliberate omissions on the application
  • Suicide, usually if it occurs during the first two years of the policy period

If an insured person dies within the first two years of your taking out the policy, this will fall in the contestability period which means that your insurance company is likely to conduct an investigation to look for potential fraudulent statements, omissions, or evidence of suicide.

How to Find the Best Key Person Insurance Coverage in Colorado

If you are shopping for life insurance for the key employees of your company, be sure to talk to a local independent insurance agent. These agents can help you compare policies and quotes from a few competing insurers so you can be certain you are getting suitable coverage at a reasonable price.

There are more than 250 independent agents in Colorado so it should be easy to find an insurance agent with an office near you.

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