As a business owner, you may rely on specific individuals within your organization to help drive its success.
These individuals may include key employees, partners, or other key personnel. The loss of a key person can significantly impact your business, both financially and operationally. That's where Key Person Life Insurance can help.
Who is Considered a Key Person?
A key person is someone whose contributions to the business are essential to its continued success. This could include anyone from a top salesperson to a key executive or partner. Generally, a key person is someone who is
Essential to the success of the business
Has a unique set of skills or knowledge
Has significant business contacts or relationships
Generates a significant portion of the business's revenue or profits
Benefits of Key Person Life Insurance Key Person Life Insurance offers several benefits to businesses, including
Financial Protection The death benefit from the policy can help cover the costs associated with finding and training a replacement for the key person and offset any potential loss of revenue or profits.
Business Continuity With the death benefit from the policy, the business can continue to operate while it searches for a replacement for the key person.
Creditworthiness Having Key Person Life Insurance can make a business more attractive to lenders, as it shows that the business has a plan to address the loss of a key person.
Tax Benefits In some cases, the premiums for Key Person Life Insurance may be tax-deductible as a business expense, and the death benefit is typically received tax-free.
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Revenue loss
Company's reputation
Buying out shares
Repay any collateral assignment
Business growth coverage
Revenue loss coverage
Risk Factors
A company that suffers a revenue loss because of the death of a key employee (such as a high-earning agent at a real estate brokerage).
Solution
Key Person Life insurance can be taken to recoup this revenue loss.
Company’s reputation coverage
Risk Factors
A company fails to retain its clients or uphold its reputation based on a particular employee’s skills or name (like a partner at a law firm).
Solution
Key Person Life insurance can be taken to retain clients and uphold their reputation.
Buying out shares coverage
Risk Factors
A key person in your company dies unexpectedly, and the company suffers a loss.
Solution
Key Person life insurance helps another partner to buy out shares in partnership businesses (like a dental practice) where one partner dies.
Repay any collateral assignment coverage
Risk Factors
A key person, before dying, had taken a business loan that was still being paid off.
Solution
Key Person life insurance can help to repay any collateral assignment business loans that the key person held or co-signed.
Business growth coverage
Risk Factors
You may need a loan in the near future for the growth of your business.
Solution
Key Person life insurance can help you get new business loans and help with other means to grow your business.
At our Insurance Agency, we understand that every business has unique needs. That's why we offer customized Key Person Life Insurance policies that can be tailored to meet your specific requirements. In addition, our experienced professionals can work with you to design a policy that provides the protection you need to safeguard your business from the unexpected.
Contact us today to learn more about Key Person Life Insurance and how it can help protect your business.
