Why You Need Key Man for your Key People

 

email-image

We all know a person who acts as the "face" of their company. Many times they are the business and without them we'd certainly feel a change in the day to day operations. But what would you do if that person left, became disabled or passed away? If your business relied on them to be financially successful, how would you recover? How long would it take to find a train a replacement? How much revenue loss would occur in that time frame? If you have ever grappled any of these questions, it is probably a good idea to purchase Key Person Insurance.

Key Person coverage uses Life Insurance and/or Disability Insurance, to protect businesses from financial loss should a key employee or owner die or become disabled. The majority of the time, the business pays for the insurance and is the beneficiary of the policy; but sharing the premium payments and benefit with the key person is also acceptable. This enables the company to use the proceeds from the life insurance to pay debts, recruit a replacement, or even close the business if necessary.

For example, Joan owns a small consulting firm and her top consultant was injured in a car accident. She learns that her best person is going to need surgery and be out for 8-12 weeks. Joan now has a back log of clients and no other employees with the knowledge or acumen to independently assist. Had Joan purchased a Key Person Disability policy (or Key Person Life policy with Disability rider), then she could use the benefits paid to hire another consultant, maintain payroll, or any myriad of things to help the business remain solvent while the employee recovers.

Did the example above resonated with you? Are you ready to put the proper controls in place for your business? Then call us today to find out how we can help you establish Key Person Insurance for those critical to your organization.

Life happens, let us help you be prepared.

Comments

Post a Comment

Popular posts from this blog

Inflation: A Pickle for Property Insurance

Image
All of us are feeling the grip of inflation. Building materials costs have spiked over the last 2 years. Supply chain disruptions and labor shortages are causing major delays in construction projects. As a result, it now costs more to rebuild your home than it did before.    When was the last time that you checked your policy limits? Are they high enough to cover a 26% increase in building costs? If not, then you have to pay the difference out of pocket.   Hanover Insurance Company shared some of the numbers behind inflation in a recent  post .  They recommend that policyholders consider   Increasing coverage to avoid potential gaps in the current market Include the cost of any recent renovations in your policy limits Consider higher deductibles to help offset the cost of policy limit increases   The insurance industry is working to help policyholders stay ahead of the curve. Many carriers are running Replacement Cost Estimates on covered properties and adjusting property limits as nee
Read more

Revised Auto Insurance Laws in Virginia

Image
Recently, the Virginia Assembly passed laws effecting Auto Insurance Policies issued to Virginia Drivers. The state of Virginia is now requiring changes to underinsured motorist coverage and has revised the applicable statute, VA Code section 38.2-2206. Changes will start for all new and renewal policies on July 1, 2023 . Through this amendment, damages caused by an accident with an underinsured motor vehicle will now be paid in addition to any bodily injury or property damage liability coverage available for payment.    A named insured may decline this change in coverage and select Underinsured Motorist Coverage (Alternative Coverage). Under the Alternative Coverage, damages caused by an accident with an underinsured motorist may be reduced by bodily injury or property damage liability coverage available for payment. If you choose to decline the change in coverage and instead elect the Alternative Coverage, a named insured must sign the Virginia Underinsured Motorist Coverage (Alterna
Read more

WATCH OUR NEW VIDEO SERIES HERE.

Image
  WATCH OUR NEW VIDEO SERIES HERE .  Insurance In An Instant is a video series designed to provide tips and guidance on insurance topics that directly impact our clients. Have questions? Want to see a particular topic? Let us know.  Click here to visit the Channel Page.
Read more