Key Person Insurance

Does your business include someone whose contribution is vital to the survival of your company? If yes, then Key Person insurance should be a part of your business continuity and succession plan—especially if you’re a small business owner.

If a key member of your team passes away or becomes disabled, your bottom line could suffer in the short-term, and over the long-term, you may have to find a replacement or even shut down your business. However, with the benefits payable from a Key Person Life or Disability Insurance plan, you could:

Recruit, hire and train a replacement;
Pay off debt and deal with creditors;
Address lenders’ concerns about your company’s financial health;
Reassure customers, employees and investors that the business will continue operating;

Also, if you and your family rely on your business as a primary source of income, key person insurance can help ensure that the business will continue to provide a secure financial future.

Key Person Insurance includes:

Key Person Life Insurance
Key Person Disability Insurance

Key Person Disability Insurance:

If an owner, co-owner or a key person becomes disabled, your business could be faced with the same financial situation as if the person had died—but no life insurance policy would pay out.

However, with a Key Person Disability Insurance Policy you could use the monthly cash benefit as working capital; to recruit, hire and train a replacement; to pay off debts; and much more.

Key Features and Benefits:

The person being insured must be between ages 18 and 55;
The policy can be maintained until the insured reaches age 62 or terminates full-time employment with your business for reasons other than total disability;
The minimum benefit payable is $2,500 per month for 12 months, with a maximum benefit of up to $15,000 per month for 12 months;
Benefits can start after either 60 or 90 days of total disability.

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Key Person Life Insurance:

If your business employs someone whose contribution is vital to your company’s survival, consider making Key Person Insurance part of your business continuity and succession plan—especially if you’re a small business owner. Should a key member of your team pass away, the financial implication on your company could be dire.

Key Person Insurance Is an important form of business insurance. There is no legal definition for “Key Person Insurance”. The aim is to compensate the business for losses and facilitate business continuity. An employer may take out a Key Person Insurance Policy on the life or health of any employee whose knowledge, work, or overall contribution is considered uniquely valuable to the company.

The employer does this to offset the costs (such as hiring temporary help or recruiting a successor) and losses (such as a decreased ability to transact business until successors are trained), which the employer is likely to suffer in the event of the loss of a Key Person.

Key Person Insurance provides compensation for:

Losses related to the extended period when a key person is unable to work, to provide temporary personnel and, if necessary to finance the recruitment and training of a replacement.
Insurance to protect profits. For example, offsetting lost income from lost sales, losses resulting from the delay or cancellation of any business project that the key person was involved in, loss of opportunity to expand, loss of specialized skills or knowledge.
Insurance to protect shareholders or partnership interests. Typically this is insurance to enable shareholdings or partnership interests to be purchased by existing shareholders or partners.
Insurance for anyone involved in guaranteeing business loans or banking facilities. The value of insurance coverage is arranged to equal the value of the guarantee.

Let us help you implement this important business solution. Contact us for your no obligation consultation.