Many small businesses depend on specific individuals for their company's continuing success. Key Man insurance enables you to protect your business against the cost of loss or disability of key members of your staff or management team by purchasing Life insurance and/or Disability insurance.
1. The success or ongoing existence of a partnership is dependent on the abilities of one or more of the partners.
If one of the partners suddenly passed away, or became incapacitated and could not continue work, Key Man insurance would provide a financial cushion for the remaining partners, enabling the business to continue while new talent was recruited. Experienced insurance professionals agree that between the ages of 30-65 it is much more likely that a person will become disabled than die. For this reason, disability insurance should play a role in any Key Man insurance decisions.
2. The business needs to secure a loan.
When granting a loan to a small business, a lender will often require that one or more of the owners or employees take out life insurance and/or disability insurance protection, with the company or lender named as the beneficiary.
3. A salesperson generates a high percentage of total sales.
The insurance would cover lost sales revenue while the employee recovered from illness or accident, or in the case of death, until a new employee could be hired and trained.
4. The business merges with another company, goes public or enters any type of financial/operational arrangement with another company.
Key Man insurance is often taken out for top executives, project supervisors or marketing individuals. Tech companies often take out Key Man insurance on one or more of their indispensable engineers or designers.
Clearly, other circumstances could arise that warrant considering Key Man insurance. You should consider Key Man insurance if the success of your company and ongoing operations depend on the abilities of one or more individuals.
United Financial Services can help you determine which individuals within your company are vital to the company's short- and long-term success and whether it would be beneficial to invest in this type of coverage.
We can also recommend a Key Man insurance policy tailored to meet the specific needs of your company. Complete the form today!
