{"id":855,"date":"2026-10-19T08:07:50","date_gmt":"2026-10-19T08:07:50","guid":{"rendered":"https:\/\/nrcpas.com\/life-insurance-guides\/?page_id=855"},"modified":"2026-10-31T06:29:46","modified_gmt":"2026-10-31T06:29:46","slug":"what-does-key-person-insurance-cover","status":"publish","type":"page","link":"https:\/\/nrcpas.com\/life-insurance-guides\/key-person-insurance\/what-does-key-person-insurance-cover\/","title":{"rendered":"Key Person Insurance Coverage in Florida: What It Covers"},"content":{"rendered":"\n
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Key Person Insurance | Florida<\/p>

Protect Your Business When a Key Person Is Lost<\/h1>

Key person insurance is designed to help a Florida business manage financial losses if a key employee dies or becomes disabled. Call NR CPAs & Business Advisors to schedule a coverage review.<\/p>

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

By Nischay Rawal \u00b7 Published October 19, 2026<\/p>\n\n

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Key person insurance<\/a> pays a business for financial losses caused by the death or disability of a key employee. The business owns the policy and receives the benefit. The Insurance Information Institute<\/a> publishes a small business owners’ guide to insurance with a page on life insurance for key employees.<\/p>\n

This page explains what key person insurance covers, who can buy it, and how federal and Florida rules apply. NR CPAs & Business Advisors is a Miami CPA firm. Nischay Rawal is the licensed insurance agent who offers insurance, separately from the accounting practice.<\/p>\n

What does key person insurance cover?<\/h2>\n

Key person insurance covers the financial losses a business may suffer when a key employee dies or becomes disabled. The business is the owner and the beneficiary. The money goes to the business, not directly to the employee’s family.<\/p>\n

Florida law names who a business can insure. These include owners, directors, officers, partners, managers, and key employees, or any affiliate or subsidiary of the business, if consent is obtained in writing from the key employees or persons before the insurance is purchased. Fla. Stat. \u00a7 627.404<\/a> ties a key employee to a position or pay level described in federal tax law.<\/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 can a business insure?<\/h2>\n

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, or of its key employees or key persons, if consent is obtained in writing from those key employees or persons before the insurance is purchased. The consent must come before the insurance is purchased.<\/p>\n

Florida also bars the business from retaliating against a key employee who says no. A business that takes adverse action against a non-consenting employee breaks this rule.<\/p>\n

Federal rules add their own conditions. For employer-owned contracts on key employees or key persons, IRC 6039I refers to valid consent in its annual filing requirements. Under IRC \u00a7 101<\/a>, gross income does not include amounts received under a life insurance contract if such amounts are paid by reason of the death of the insured, except as otherwise provided in that section.<\/p>\n

How do the tax rules work for key person coverage?<\/h2>\n

Premiums are generally not deductible when the business is the beneficiary. Death proceeds are generally left out of gross income. Employer-owned contracts have extra conditions.<\/p>\n