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Key Person Insurance in Texas

Texas expressly permits a for-profit corporation to be named beneficiary when the insured is its officer or stockholder, but that statute does not make every employee a key person. A federal appeals court applying Texas law held that ordinary employment and routine replacement costs do not establish an employer’s insurable interest; the insured can also designate an entity as beneficiary or owner in writing when applying for a policy on their own life. 1,2

What Is Key Person?

Key person insurance pays the business, not the person’s family, when a founder, partner or employee it relies on dies. Disability, overhead expense and buyout funding are separate products to discuss on their own. Read the national Key person guide.

What to Watch for in Texas

  • Match the Entity Beneficiary to the Insured’s Role

    Texas law expressly allows a for-profit corporation, joint stock association, or trust estate to be named beneficiary on the life of its officer or stockholder; a partnership or partner may be named on a partner’s life. If the insured is neither an officer nor a stockholder or partner, do not rely on those statutory beneficiary provisions alone. 1

  • Show Why This Person Is Crucial

    In Mayo v. Hartford, the Fifth Circuit applying Texas law held that ordinary employment was not enough and rejected routine hiring, training, and productivity costs as a basis for insuring rank-and-file workers. For a non-owner employee, document the person’s specific contribution and why the business reasonably expects financial benefit from that person’s continued life. 2

  • Separate Employer Placement from an Insured’s Application

    Texas lets an adult apply for a policy on their own life and designate an individual, partnership, association, corporation, or other legal entity as beneficiary, owner, or both in writing. Confirm who is applying and who owns the contract; this statutory route is different from assuming an employer may insure any employee simply because of the employment relationship. 1

  • Review Any Later Transfer or Assignment

    Texas provides that a beneficiary or owner designated under its life-policy subchapter has an insurable interest after designation, and applies the same rule to entities receiving a transfer or assignment made under that subchapter. Have the carrier confirm any planned change of owner or beneficiary follows the policy and statutory designation process. 1

Who Regulates Insurance in Texas

Texas Department of Insurance

TDI licenses agents and insurers, reviews company rate filings, and investigates complaints against insurance companies and people it regulates. Its complaint page states limits on what it can resolve, including disputes outside its regulatory authority. 3,4,5

Surplus-lines tax and stamping office

Reported tax rate: 4.85% of gross premium plus 0.04% SLTX stamping fee When Texas is the insured’s home state, the state tax is 4.85% of gross premium; absent a compact allocation agreement, a multistate policy can be taxed on its entire premium. Policies effective on or after Jan. 1, 2024 also carry a 0.04% stamping fee; SLTX invoices the broker and says the insured pays it, and the surplus-lines insurer is not covered by the Texas guaranty association. 6,7,8

Surplus Lines Stamping Office of Texas

Providers With Documented State Licenses

These providers publish a national listing for Key person; the state records document licenses for the entities and roles shown below. Some records rely on company-reported information rather than independent regulator verification. A national listing does not confirm the product is available in Texas. Check the regulator’s license lookup and confirm state availability for your business when requesting a quote.

  • VouchVouch Specialty Insurance Services, LLCInsurance producer, Surplus-lines broker · checked 2026-09-28Vouch’s licenses page, effective January 16, 2025, lists producer licenses in all 50 states and DC. Its separate surplus-lines table includes Idaho number 870820, while a footnote says Georgia and Idaho do not issue agency-level surplus-lines licenses. Because those statements conflict for Idaho, this record keeps Idaho producer-only and does not treat the table number as established agency surplus-lines authority. The page is company-reported and does not establish product availability. 16

Questions to Ask Before You Buy in Texas

  1. Is the insured an officer, stockholder, or partner covered by Texas’s express entity-beneficiary rules, or must we establish another lawful interest?
  2. For an employee who is not an owner, what evidence shows this person is crucial to our business beyond routine hiring or training costs?
  3. Will the insured apply and designate the business in writing, or will the business apply—and who will own the issued policy?
  4. If we later transfer ownership or change the beneficiary, what application or policy records must be updated under Texas law?

Key Person in Texas: FAQ

Can a Texas company be beneficiary of key person life insurance? 1

Yes, when the insured is an officer or stockholder of a for-profit corporation, joint stock association, or trust estate; Texas also provides for a partnership or partner when the insured is a partner. Other employee cases need their own support and should not be treated as covered by these categories. 1

Can a Texas employer insure any employee just because they work there? 2

No. Mayo held under Texas law that ordinary employment and normal costs of replacing a worker were insufficient; an employer needs a genuine interest in the particular insured’s continued life. 2

Can an employee designate a Texas business as life insurance beneficiary? 1

Yes. An adult may apply for insurance on their own life and designate a corporation or another legal entity as beneficiary or owner in writing, subject to the policy’s terms. 1

Key Person in Other States

Other Coverage in Texas

Sources

  1. Texas Insurance Code Chapter 1103, Life Insurance Policy Beneficiaries. Texas Legislature; §§ 1103.003–.004, .053–.056; current chapter page accessed 2026-09-28. Accessed 2026-09-28.
  2. Mayo v. Hartford Life Insurance Co., 354 F.3d 400 (5th Cir. 2004). U.S. Court of Appeals for the Fifth Circuit; Pages 12–15, Texas insurable-interest law; ordinary employment and statutory officer/stockholder categories. Accessed 2026-09-28.
  3. texas insurance regulator. State insurance regulator; TDI regulator page outlines licensing, financial oversight, compliance/enforcement, and rate review. Accessed 2026-09-28.
  4. How to Find a Licensed Insurance Agent or Adjuster. State insurance regulator; TDI says search by agent name or license number and links to the state license search. Accessed 2026-09-28.
  5. Get Help with an Insurance Complaint. State insurance regulator; Direct complaint page explains covered entities, exclusions and online filing; Help Line 800-252-3439. Accessed 2026-09-28.
  6. Texas Insurance Code §§225.002–225.004. Texas Legislature; §225.002 limits chapter to Texas-home-state insured; §225.004(a) 4.85%; (a-1) NRRA home-state limitation; (c) entire premium where Texas is home state and no compact agreement. Accessed 2026-09-28.
  7. Stamping Fees & Taxes. Surplus Lines Stamping Office of Texas; Current policy-date table lists 0.04% for inception 1/1/2024 and after; stamping fee invoices go to brokers; site says fee is paid by insured. Accessed 2026-09-28.
  8. Texas Surplus Lines Companies. Texas Department of Insurance; TDI says surplus-lines insurers are not licensed in Texas and its guaranty association member; eligibility/disclaimer and broker financial-responsibility details. Accessed 2026-09-28.
  9. Licenses. At-Bay; Current producer introduction and state table; At-Bay Insurance Services LLC; P&C and surplus-lines identifiers. Accessed 2026-09-21.
  10. Licenses and Carriers. Coalition; Licenses and Carriers, re-read 22 September 2026: Insurance Licenses table for Coalition Insurance Solutions, Inc., national producer number 18419475, with producer and surplus-lines numbers for all 50 states and DC including California 0L76155, Georgia 196479, Texas 2199630 and 2205589, Pennsylvania 815731 and 817452, Colorado 539028 and Wisconsin 3000108852. Insurance Carriers table naming, with NAIC numbers, Allianz Underwriters Insurance Company 36420, Arch Specialty Insurance Company 21199, Ascot Specialty Insurance Company 45055, Ascot Insurance Company 23752, Aspen Specialty Insurance Company 10717, Chaucer Insurance Company DAC, Coalition Insurance Company 29530, Fireman's Fund Indemnity Corporation 11380, Fortegra Specialty Insurance Company 16823, Lloyd's of London, MSIG Specialty Insurance USA Inc. 34886, MS Transverse Specialty Insurance Company 41807, Steadfast Insurance Company 26387, Vantage Risk Specialty Insurance Company 16275 and Zurich American Insurance Company 16535. Accessed 2026-09-22.
  11. Insurance Producer Licenses. Corgi Insurance; Current complete Insurance Producer Licenses table for Corgi Insurance Services, Inc.; 50 rows covering 49 states and DC (DC 3003091619); no New Mexico row; no NPN or as-of date shown. Accessed 2026-09-28.
  12. About Hiscox US Insurance. Hiscox; Hiscox Insurance Company Inc. NAIC 10200 as Chicago, IL domiciled insurer admitted or licensed in all 50 states and D.C.; Hiscox Inc. as general agent and Lloyd’s coverholder for Syndicates 33 and 3624; surplus-lines placements through licensed surplus-lines brokers; A.M. Best rating statement. Accessed 2026-09-16.
  13. Licenses. ERGO NEXT Insurance; Current entity-by-state license table reopened 28 September 2026: 50 rows under Next First Insurance Agency, Inc., including Washington, DC; New York rows instead list Next Insurance Services PC-1423070 and AP Intego BR-1198885. Accessed 2026-09-28.
  14. About Risklytics. Risklytics; What we do; Who we insure; Licensing; Agency licenses table dated 2026-09-10. Accessed 2026-09-16.
  15. Insurance Licenses by State. TechInsurance; Current state table; identifies TechInsurance as a division of Specialty Program Group LLC d/b/a SPG Insurance Solutions; lists DC 3000041536 and labels Rhode Island “Individual licenses,” without an agency license number. Accessed 2026-09-28.
  16. Licenses. Vouch; Effective 16 January 2025: Vouch Specialty Insurance Services, LLC, NPN 19926463; P&C table (50 states and DC); surplus-lines table includes Idaho 870820; footnote says Georgia and Idaho do not issue agency-level surplus-lines licenses; Idaho retained as producer-only due to conflict. Accessed 2026-09-15.

Updated .

This guide is informational and does not determine whether a policy is available or meets your needs. Editorial policy. To suggest a correction, contact Spot with a supporting source.

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