Last updated: March 2026
How Much Does Key Person Insurance Cost?
Cost Breakdown by Type
| Type / Procedure | Without Insurance | With Insurance |
|---|---|---|
| Key Person Term Life ($500K, monthly) | $0 – $0 | $50 – $150 |
| Key Person Term Life ($1M, monthly) | $0 – $0 | $100 – $300 |
| Key Person Term Life ($2M+, monthly) | $0 – $0 | $200 – $500 |
What Affects the Cost
- Your age, location, and health status
- Coverage level and deductible chosen
- Provider or carrier
- Claims history
- Credit score (for some insurance types)
- Discounts available (bundling, loyalty, safe driver, etc.)
Insurance Coverage
Typical coverage: Key person insurance protects a business from financial loss if a critical employee dies or becomes disabled. The business owns and is the beneficiary of the policy.
Insurance costs vary widely based on coverage level, location, age, and claims history. Shopping around and comparing quotes is the single most effective way to save money on insurance premiums.
How to Save Money
- Compare quotes from at least 3-5 providers
- Bundle policies (home + auto) for 10-25% discounts
- Choose higher deductibles for lower monthly premiums
- Ask about all available discounts
- Review coverage annually during open enrollment
- Consider employer-sponsored plans which subsidize 50-80% of premiums
Related Procedures & Costs
Frequently Asked Questions
Key person insurance costs are similar to individual term life insurance, typically $50 to $500 per month depending on coverage amount, age, and health of the key person.
A common formula is 5 to 10 times the key person's annual compensation, or enough to cover projected revenue loss during the replacement period, typically $500,000 to $5 million.
Premiums for key person insurance are generally not tax deductible. However, the death benefit received by the business is usually tax-free.