Life Insurance/Key-Person Insurance

Life Insurance/Key-Person Insurance for Business Continuity

Key person insurance or key employee insurance is coverage that will protect your company in the case of an untimely death or disability of a top salesperson, executive, or business owner. Keyman insurance provides peace of mind to business owners and shareholders alike knowing that the business can continue operations without major disruption in the event of the loss of a key employee. If death or disability strikes your company, key person insurance may be the difference between the company’s demise and its ultimate success.

Is Your Business Adequately Protected?

In many cases, and especially in small to medium-size businesses, success depends upon a few top individuals that possess specific talents, skills and experience. These key employees are critical to the long term performance of the company. Losing one of these essential people due to death or disability can have a damaging effect on any business.

The solution to protecting your business is key person insurance. Key person insurance provides the financial means to stabilize a company during the adjustment period after the loss of a key employee or executive. When death or disability occurs, the business may lose critical management skills and may experience periods of falling sales and productivity. Additionally, significant costs will be incurred identifying and training the person or persons that have the ability to take the place of the key employee. If your business would be dramatically impacted by the loss of one or more of your top people, key man insurance can effectively protect against this risk and you should consider purchasing key man insurance policies to protect your company.

How does it work?

With both key man life and disability insurance, the business secures the policy on the life of the key person. It will own the policy, pay the premiums and be the beneficiary in the event the key employee dies or is disabled. The premium payments made by the company are not tax deductible but in most cases, the proceeds received are income tax free¹.

Key person insurance policies are designed to protect the business, not the key employee. If a key employee dies or is disabled, the policy proceeds can be used by the company for any purpose. Normally, businesses will use the funds received from a key man policy to cover expenses associated with finding capable replacements or to cover short term revenue deficits.

If you have questions or would like more information on this topic please contact us or request a quote. Our knowledgeable staff can educate you and guide you through the process of protecting your resources and your business.