The Covenant Your Term Sheet Already Requires — Handled Before It Becomes a Closing Condition
Key person and buy-sell life insurance built for founders, VC-backed startups, and defense industrial base contractors — so a diligence checklist item never turns into a delay.
Talk to Us About CoverageWhy This Comes Up
If you’ve raised institutional capital, you’ve probably already seen the language: a Keyman covenant naming a founder or technical lead, a buy-sell requirement tied to ownership transfer, or a prime contractor asking how your business survives the loss of one critical person. These aren’t optional extras — they’re conditions written into the deal. Handling them ahead of time, rather than scrambling during diligence, is what separates a smooth close from a delayed one.
Key Person Insurance
Protects your business against the financial impact of losing a founder, technical lead, or other person your funding — or your federal contract — is tied to. The company owns the policy, pays the premium, and receives the benefit.
Buy-Sell Funding
Gives co-founders a funded, pre-agreed way to buy out an owner’s stake if something happens to them — without forcing a fire sale of company assets or an unwanted new partner at the table.
Where This Shows Up
- Series A/B term sheets — VCs frequently require key person coverage on named founders as a condition of funding, sized to a multiple of the round.
- DoD Office of Strategic Capital and SBIR-funded companies — funders want assurance that the technical talent behind the technology is protected against loss.
- Multi-founder DIB startups — a funded buy-sell agreement means an ownership transition doesn’t threaten a company’s ability to perform on an active contract.
- Prime contract performance risk — when past performance and teaming credibility rest on named personnel, key person coverage supports continuity if the unexpected happens.
- Venture debt closings — lenders often require the same covenant a VC does; getting coverage placed quickly can keep a debt close on schedule.
Key Person vs. Buy-Sell — At a Glance
| Question | Key Person Insurance | Buy-Sell Funding |
|---|---|---|
| Who’s protected? | The business itself | The remaining owners |
| Who owns the policy? | The company | Typically the company or a cross-purchase structure among owners |
| What triggers it? | Death or disability of a named key person | Death, disability, or a triggering ownership event |
| What problem does it solve? | Revenue/operational disruption, funder covenant, contract continuity | Forced sale of assets, unwanted new ownership, valuation disputes |
Frequently Asked Questions
How much coverage does a VC term sheet usually require?
It varies by fund and round size, but coverage amounts are commonly tied to a multiple of the funding raised or the company’s projected revenue need through its next milestone. We’ll review your specific term sheet language and size coverage to match what’s actually required — not a generic figure.
Can this coverage close a stalled term sheet or venture debt closing?
Often, yes. When a Keyman covenant is the last open item, we prioritize getting an application underwritten and a policy placed quickly so it doesn’t become the reason a closing slips.
Does this replace legal advice on my buy-sell agreement?
No. We fund the buy-sell obligation your attorney structures; we don’t draft the agreement itself. We work alongside your counsel, not in place of them.
Is this available for companies outside Florida and Georgia?
Jhenesis Insurance is licensed in Florida and Georgia. Reach out and we’ll let you know how we can help or point you toward next steps if your company is based elsewhere.