Providing Protection for Your Company’s Future
What would happen if a key executive or key employee were to die prematurely? What if key leaders were killed in a plane crash? Who would lead the company, and what financial impact would there be?
It is important to have a plan in place for these kinds of situations. While insurance on the physical assets of a company is important, and may be required by your lenders, are you protecting your most valuable assets – your human capital? We specialize in helping companies of all sizes plan for these types of contingencies and funding those plans with innovative products like key person life insurance.
What is Key Person Insurance? – Key Person, which is also known as “key man insurance” and “key employee insurance”, is coverage that helps protect businesses in the case of an untimely death of a key person in the organization. It helps provide “financial peace of mind” to the owners of a business – including shareholders – knowing that a capital infusion will be made just at the time when it may be needed most.
Who May be Considered Key People? – For the most part, anyone you consider as key to the operation of the business where there would be a significant financial impact in the event of an untimely death. They often include business owners, partners, or executives whose skills, talents, and expertise are crucial to the continued growth of the organization.
Who Needs Key Person Insurance? – Key person insurance can be needed by a broad range of companies for many reasons. However, it is generally most critical for small and medium size businesses where dependence on the success of the organization rests on both the talents and the expertise of a select number of individuals. The death of one of these key individuals could have a significant impact on the organization and without an infusion of capital could lead to the demise of the business.
How Much Key Person Life Insurance Is Needed? – It can be hard to put an exact monetary value on individual contributors. There are also financial considerations such as how much the insurance coverage may cost. We consult with our clients, and often bring in their other advisors such as their CPA in order to arrive at an appropriate amount of coverage, balancing the future needs of the business in the event of a premature death with current fiscal restraints.
Key person insurance is the most cost effective way to reduce the financial impact associated with the premature death of a contributor to your company. Ask us for more information about how key person insurance can help ensure the future of your organization.