The short answer
The policy doesn't automatically transfer to whoever replaces them. Key man insurance is written around a specific named individual, so if that person leaves the business — rather than passing away or becoming critically ill — the existing policy typically needs to be cancelled, reassigned, or replaced with a new one covering their successor.
Why this comes up
Businesses often set up key man insurance once, around a founder or a critical early hire, and then forget about it as the team changes. Years later, the person named on the policy may have moved on entirely, leaving the business with cover that no longer protects against its actual risk.
What to check in your policy
Check who is specifically named as the insured key person, and ask your insurer what options exist if that person leaves — some policies allow the business to retain the policy's cash value or convert it, depending on how it was structured. If your key personnel have changed since the policy was set up, it's worth reviewing whether the cover still matches who the business actually depends on today.
Work with Cover Buddies Today!
We can review your existing key man policy and help you update it as your leadership team changes, so the cover keeps pace with the business.
Learn more about key man insurance or get a quote to review your options.
