The Complete Guide to Key Person Insurance in Canada

What is Key Person Insurance?

Key person insurance protects Canadian businesses when a critical owner or employee dies. Learn how it works, who needs it, and why banks care about it.

Who Qualifies as a Key Person?

Not every employee qualifies as a key person for insurance purposes. Learn how insurers define a key person and who your business should be insuring.

How Does Key Person Insurance Work?

Learn how a key person insurance policy works in Canada — who owns it, who pays the premiums, and what happens when a claim is made.

Term vs. Permanent — Which is Right for Your Business?

Should your business use term or permanent life insurance for key person coverage? Here's how to decide based on your situation.

How Much Key Person Insurance Does Your Business Need?

There's no single formula for key person insurance coverage. Learn the three methods Canadian businesses use to calculate the right amount.

The Loan Coverage Method (What Banks Require)

If your business has a loan, your bank may require key person coverage equal to the outstanding balance. Here's how this works in Canada.

The Revenue Contribution Method

Calculate key person insurance coverage based on how much revenue the key person generates for your business. A practical guide for Canadian business owners.

The Replacement Cost Method

Key person insurance can cover the cost of finding, hiring, and training a replacement. Here's how to calculate that number.

Key Person Insurance for Small Business Owners

Small businesses are most vulnerable to the loss of a key person. Learn why key person insurance is especially important for Canadian small business owners.

Do Banks Require Key Person Insurance?

Many Canadian banks and lenders require key person insurance as a condition of a business loan. Find out when it's required and what they're looking for.

Key Person Insurance for Partnerships

When a business has two or more owners, key person insurance protects against the financial impact of losing a partner. Here's how it works in Canada.

Key Person Insurance for Professional Corporations

Doctors, dentists, lawyers, and accountants operating through a professional corporation have unique key person insurance needs. Here's what you need to know.

Key Person Insurance vs. Buy-Sell Agreement — What's the Difference?

Key person insurance and buy-sell agreements are often confused. Learn how they differ, how they work together, and which your business needs.

Funding a Buy-Sell Agreement with Life Insurance

Life insurance is the most common way to fund a buy-sell agreement in Canada. Learn how it works and how to structure it correctly.

Business Succession Planning and Key Person Insurance

Key person insurance plays a central role in business succession planning. Learn how Canadian business owners use it to protect their exit.

Tax Treatment of Key Person Insurance in Canada

Key person insurance premiums are generally not tax-deductible in Canada, but the death benefit is usually received tax-free. Here's what the CRA says.

Key Person Insurance and Your Corporation

When a corporation owns a key person insurance policy in Canada, there are specific rules around ownership, beneficiaries, and tax treatment.

Provincial Considerations for Key Person Insurance in Canada

Key person insurance rules are largely federal in Canada, but there are some provincial differences worth knowing about.

How to Apply for Key Person Insurance — What to Expect

Applying for key person insurance in Canada is straightforward. Here's a step-by-step walkthrough of the application and underwriting process.

What Underwriters Look For in a Key Person Application

Insurance underwriters assess both the key person's health and the business itself. Here's what they look at and how to prepare.

Pre-Existing Conditions and Key Person Insurance

A key person with a pre-existing health condition can still get coverage in many cases. Here's what Canadian business owners need to know.