Why You Need Key Man for your Key People
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.