Key-Person insurance can save a business if one of the key people of the business dies. As with everything life insurance, this is a dismal consideration. However, the cost of not considering the finanical impact of losing a key person to your business could cause the complete collapse of the business.
The main differences with this sort of plan is ownership, premium payor and benficiary. Key-man insurance is owned by the business, the business is the premium payor and the business is the benificiary if the insured does die. Plans can be set up with residual compensation benefits if the insured lives or can be coordinated with a Buy-Sell agreement. A similar plan can be built to insure against the disability of a key person as well.
The benefits from this type of insurance can be used to cover all the expenses associated with the loss of a key person. It can help cover lost revenue or sales, bringing in a consultant, financing a recruitment search, paying moving expense or a signing bonus. Whatever is needed to get your operation up and running again as smoothly and quickly as possible.
Historically, companies have purchased "cash value" life insurance policies to fill Key Person concerns. However, in the past decade, it has become mainstream to purchase term life to cover this need. Only in situations where some sort of executive compensation benefit, buy-sell or succession plan is being included does a permanent cash value policy tend to make sense.
Contact me to discuss your situation and best options.
