{"id":4584,"date":"2026-10-24T03:35:05","date_gmt":"2026-10-24T03:35:05","guid":{"rendered":"https:\/\/nrcpas.com\/life-insurance-guides\/key-person-insurance\/key-person-insurance-cash-value-and-policy-loans\/"},"modified":"2026-10-30T07:53:19","modified_gmt":"2026-10-30T07:53:19","slug":"key-person-insurance-cash-value-and-policy-loans","status":"publish","type":"page","link":"https:\/\/nrcpas.com\/life-insurance-guides\/key-person-insurance\/key-person-insurance-cash-value-and-policy-loans\/","title":{"rendered":"Key Person Policy Cash Value Loan Guide for Business Owners"},"content":{"rendered":"\n
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Key Person Insurance | Florida Businesses<\/p>

Key Person Policy Cash Value Loans: A Guide for Business Owners<\/h1>

Learn how a loan against a key person policy's cash value works, what it does to the death benefit, and what to weigh before you borrow.<\/p>

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By Nischay Rawal \u00b7 Published October 23, 2026<\/p>\n\n

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A key person policy cash value loan lets a business borrow from the insurance company, using the policy’s cash value as security. Only permanent policies, such as whole life, build cash value. Term key person policies do not. Before borrowing, a business should know how the loan affects the death benefit, whether the policy can lapse, and what taxes may apply.<\/p>\n

This page explains those points in plain words. It is written for business owners in Miami, Fort Lauderdale, West Palm Beach, Orlando, Tampa and Jacksonville, and for owners across the United States, including Indian-American business owners. NR CPAs & Business Advisors is a Miami CPA firm. Insurance is offered by the licensed agent, Nischay Rawal, separately from the accounting practice.<\/p>\n

What a Key Person Policy Is and Who It Is For<\/h2>\n

A key person policy is life insurance that a business owns on the life of a key employee. The business pays the premiums and is the beneficiary.<\/p>\n

Key person coverage compensates a business for financial losses caused by the death of a key employee, according to the Insurance Information Institute guide<\/a>.<\/p>\n

A key employee is an owner, executive or staff member whose loss would hurt the company’s operations or revenue. Owners often buy coverage on a partner or top manager whose work drives sales. A business might also insure a founder whose skills it cannot easily replace.<\/p>\n

The business owns the policy, pays the premiums and receives the death benefit. The employee does not own the policy. This page covers permanent policies only, because those are the only key person policies that build cash value.<\/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>

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Schedule a coverage review<\/a><\/div><\/div>\n<\/div>\n

Which Key Person Policies Build Cash Value<\/h2>\n

Only permanent life insurance, such as whole life, builds cash value. Term coverage pays a death benefit but builds no cash value.<\/p>\n

Cash value is the amount a policy accumulates over time. The insurer holds it, and it appears alongside the death benefit. Cash surrender value is the cash value the owner would receive by ending the policy. Any outstanding policy loan, plus the interest that has built up on it, is generally subtracted from what the policy pays, whether the business surrenders the policy for its cash value or the insured person dies and the death benefit is paid.<\/p>\n