{"id":3785,"date":"2026-10-21T00:55:42","date_gmt":"2026-10-21T00:55:42","guid":{"rendered":"https:\/\/nrcpas.com\/life-insurance-guides\/key-person-insurance\/key-person-insurance-for-s-corporations\/"},"modified":"2026-10-31T04:53:34","modified_gmt":"2026-10-31T04:53:34","slug":"key-person-insurance-for-s-corporations","status":"publish","type":"page","link":"https:\/\/nrcpas.com\/life-insurance-guides\/key-person-insurance\/key-person-insurance-for-s-corporations\/","title":{"rendered":"Miami Key Person Insurance for S Corp: Ownership Guide"},"content":{"rendered":"\n
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Miami | Key Person Insurance<\/p>

Key Person Insurance for Your S Corp in Miami<\/h1>

See how a company-owned policy on a key owner or employee works, how the business can use the death benefit, and what to review before you buy. Insurance is offered by Nischay Rawal, a licensed insurance agent, separately from the accounting practice.<\/p>

Call us today to schedule a coverage review<\/a><\/div>
Call us today to schedule a coverage review<\/a><\/div><\/div>\n<\/div><\/div>\n\n\n

By Nischay Rawal \u00b7 Published October 20, 2026<\/p>\n\n

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Key person insurance for S corp ownership is a life insurance policy the company applies for and holds on someone whose death would cost the business money. The company, not the family, usually receives the death benefit. This page explains who owns the policy, who can be insured, what the benefit can pay for, and how the tax rules generally work. It is written for owners, shareholders, and officers weighing this decision, often for a co-owner or family member.<\/p>\n

What Key Person Life Insurance Is in an S Corporation<\/h2>\n

Key person life insurance is a life insurance policy a business buys on a key person’s life. The business pays the premiums and receives the death benefit if that person dies. The Insurance Information Institute<\/a> describes this coverage as compensation for a business’s financial losses from a key employee’s death or disability.<\/p>\n

In an S corporation, the key person is usually a shareholder-owner, an officer, or another key employee. Under the statute, a key employee or key person is someone whose position or compensation fits the definition in section 101(j)(2)(A)(ii) of the Internal Revenue Code, not someone defined by revenue-generating skills. Losing that person can slow sales, delay projects, and strain cash flow. A personal life insurance policy works differently. Under IRC \u00a7 101(a)(3)(A), the rule in the second sentence of paragraph (2) is set aside for a transfer of a life insurance contract, or any interest in it, that is a reportable policy sale. That rule concerns transfers of this kind and does not describe who owns a personal policy or who receives the benefit. An individual owns it, and the family usually receives the benefit.<\/p>\n

Two generic policy types come up most often. A term life insurance policy covers a set period. A whole life insurance policy lasts for the insured’s life and can build cash value. The NAIC Life Insurance Buyer’s Guide<\/a> explains the differences between term and permanent coverage and lists questions to ask before buying.<\/p>\n

This page is for shareholders, co-owners, and family members who want to understand the company’s options before anything is signed.<\/p>\n\n

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Not sure what your next step is?<\/h3>

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

Who Owns the Policy, Who Is Insured, and Who Gets Paid<\/h2>\n

In most key person plans, the company owns the policy, the company is the beneficiary, and the key person is the insured. These roles are set on the application, so decide them early.<\/p>\n

Florida law sets consent rules that matter here. Under Fla. Stat. \u00a7 627.404<\/a>, a business entity has an insurable interest in the life, body, and health of its owners, directors, officers, partners, and managers, any affiliate or subsidiary of the business entity, and key employees or key persons, if those people give written consent before the insurance is bought. The statute also bars the business from retaliating against or taking adverse action against a key employee or key person who refuses consent.<\/p>\n

Shareholders and non-shareholder key employees raise different questions. A shareholder’s stake may connect to a buy-sell agreement. A key employee who owns no stock still needs to give written consent before the insurance is purchased.<\/p>\n

Not every person qualifies. Underwriting decides whether an applicant is issued a policy, issued with rated terms, or declined. Insurable interest and written consent must both be in place before purchase, and neither can be assumed.<\/p>\n

What the Death Benefit Pays For and How Policy Types Differ<\/h2>\n

The death benefit goes to the company, and the company decides how to use it. The policy does not set those uses. Owners often discuss a few common uses with their accountant and attorney:<\/p>\n