{"id":11886,"date":"2026-11-09T09:26:04","date_gmt":"2026-11-09T09:26:04","guid":{"rendered":"https:\/\/nrcpas.com\/life-insurance-guides\/key-person-insurance\/key-person-and-buy-sell-funding-insurance-for-contractor\/"},"modified":"2026-11-10T06:42:13","modified_gmt":"2026-11-10T06:42:13","slug":"key-person-and-buy-sell-funding-insurance-for-contractor","status":"publish","type":"page","link":"https:\/\/nrcpas.com\/life-insurance-guides\/key-person-insurance\/key-person-and-buy-sell-funding-insurance-for-contractor\/","title":{"rendered":"Key Person and Buy-Sell Insurance for Florida Contractors"},"content":{"rendered":"\n
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Florida Contractors | Miami<\/p>

Keep Your Contracting Business Steady When a Key Person or Owner Is Lost<\/h1>

Coverage planned around payroll, bonded projects and the partners who keep your crews working.<\/p>

Call us today<\/a><\/div>
Call us today<\/a><\/div><\/div>\n<\/div><\/div>\n\n\n

By Nischay Rawal \u00b7 Published November 9, 2026<\/p>\n\n

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Your business partner has died, or a key worker can no longer work, and the jobs and payroll keep coming. This page explains how key person insurance and buy-sell funding life insurance can help a contractor business keep running and buy out an ownership share. In short, key person insurance pays the business when an essential owner or worker dies. A buy-sell agreement funded with life insurance gives the surviving owners cash to buy the departing owner’s share at a price the agreement sets.<\/p>\n

This page covers the general mechanics for a Florida contractor business. It does not recommend a specific policy, insurer or structure.<\/p>\n

Why contractors ask about key person and buy-sell funding<\/h2>\n

Contractors usually ask this when one owner’s death or disability would stop bids, crews and cash flow at the same time.<\/p>\n

A contracting business often depends on one person. That person may hold the licenses, run the bids, know the customers and manage the crew. When that person can’t work, income can drop fast. Payroll, supplier bills and bonding needs keep coming.<\/p>\n

The question often comes from someone other than the owner. A surviving partner may want to know how to buy out a late partner’s share. A spouse may be trying to understand what the business can cover. An adult child may be taking over a family company and looking for the paperwork.<\/p>\n

Many owners wait until after a loss to ask. Planning early gives the owners time to set a price, decide who pays the premiums and write the rules down while everyone can still agree.<\/p>\n\n

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If a partner's death or illness has left your contracting business with open questions, you can request a coverage review with our team to talk through how these policies would fit. Talk it through with our team — we can walk you through how a situation like yours is usually handled and what your options are.<\/p>

Schedule a coverage review<\/a><\/div>
Schedule a coverage review<\/a><\/div><\/div>\n<\/div>\n\n
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What key person insurance covers in a contractor business<\/h2>\n

Key person insurance is a life insurance policy the business owns and collects on when an owner or essential worker dies. The Insurance Information Institute describes it as compensation for a business’s financial losses from the death or disability of a key employee (Insurance Information Institute guide<\/a>). Usually the business is both the owner and the beneficiary. How the money is used is the business’s decision.<\/p>\n

Florida law sets rules on who may insure whom. A business has an insurable interest in the life, body, and health of its owners, directors, officers, partners, and managers, or of any affiliate or subsidiary’s owners, directors, officers, partners, and managers, and of its key employees or key persons, or those of an affiliate or subsidiary. That interest exists only if each person consents in writing before the policy is bought. A business may not retaliate against a key employee who refuses consent (Fla. Stat. \u00a7 627.404<\/a>).<\/p>\n

Tax questions come next. Under 26 U.S.C. \u00a7 101<\/a>, amounts paid because of the insured’s death are generally excluded from income, subject to stated exceptions. The IRS<\/a> notes that interest on those proceeds is taxable. Premium treatment is a business expense question a CPA reviews with the business’s records.<\/p>\n

How buy-sell agreements are funded with life insurance<\/h2>\n

A buy-sell agreement is a written contract. It sets what happens to an owner’s share at death, disability or departure, and the price for that share. Life insurance is one way to fund that promise.<\/p>\n

The agreement names who buys the share, the price or formula, and when payment is due. The insurance supplies cash at the owner’s death. The buyer doesn’t have to borrow or sell business assets to pay.<\/p>\n

Two common structures work differently:<\/p>\n