Replacing a key person takes time and money − and could cost the business valuable clients during the transition. Key person life insurance offers a death benefit that can help cover financial losses that occur at the death of a key person. This helps assure continuity of the business for employees, customers and creditors.

Taking out a key person policy on your top employees also affirms their value to your business, strengthening the relationship.

Other features of key person insurance


The death benefit can be used to recruit and develop a replacement for the previous key employee


Coverage is a business asset that enhances your company’s creditworthiness for commercial borrowing


The policy’s cash value may be available to your business through a withdrawal or loan if needed


The business pays the premiums, and they are non-deductible

Use Nationwide Innovator Corporate Variable Universal Life to fund a key person insurance strategy.

Key person insurance case study

Here’s an example of how it works. Check out this case study on key person life insurance.

Read this important information

Keep in mind that investing involves market risk, including possible loss of principal. As your personal situations change (i.e. marriage, birth of a child or job promotion), so will your life insurance needs. Care should be taken to ensure these strategies and products are suitable for your long-term life insurance needs. You should weigh your objectives, time horizon and risk tolerance as well as any associated costs before investing.

Also, be aware that market volatility can lead to the possibility of the need for additional premium in your policy. Variable life insurance has fees and charges associated with it that include costs of insurance that vary with such characteristics of the insured as gender, health and age, underlying fund charges and expenses, and additional charges for riders that customize a policy to fit your individual needs. The statements made above assume the policy remains in force, it isn't a modified endowment contract and the policy qualifies as life insurance under Internal Revenue Code, Section 7702. Outstanding loans and partial surrenders will reduce death benefits and may result in additional premiums to avoid a lapse. If the policy lapses, loans and partial surrenders in excess of basis will be subject to ordinary income tax.

All guarantees and protections are subject to Nationwide Life Insurance Company’s ability to pay claims.

Keep in mind that neither Nationwide nor its representatives give legal or tax advice, so you may want to discuss your specific situation with your attorney or tax advisor.