How does key person insurance work for businesses with equal partners who are all equally critical?

For businesses with multiple equal partners who are all equally critical to operations, key person insurance requires comprehensive coverage with careful structuring to protect against losing any partner while maintaining equity and fair treatment. Each equal partner should typically have key person insurance coverage based on similar valuation methods and coverage amounts, reflecting their equal contribution to business success. The business may take out separate policies on each partner, or use a single policy covering all partners with individual sum insured amounts specified. Coverage should address both revenue purposes - maintaining business operations if any partner is lost, with coverage amounts calculated based on each partner's contribution to revenue, replacement costs, and business stabilisation needs - and capital purposes - funding buyout of a deceased or disabled partner's ownership share, typically based on the agreed business valuation methodology in the partnership or shareholder agreement. For three equal partners in a business valued at 1.5 million, each partner's share buyout would require $500,000 capital-purpose coverage, plus additional revenue-purpose coverage for operational disruption. The ownership structure of policies matters significantly: the business can own all policies and receive all benefits; partners can cross-own policies on each other, with each partner owning policies on their co-partners; or policies can be held in trust with predetermined distribution rules. Tax considerations influence this choice - capital gains tax exemptions may apply differently depending on ownership structure. Partnership agreements should clearly specify insurance requirements, buyout valuations, what happens if premiums aren't paid, and how benefits are distributed. With equal partners, consensus decision-making on coverage amounts, premium sharing, and policy structure ensures all partners feel equitably protected.