When your business is just starting, there are a lot of things on your plate. You seem to spend most of your time finishing urgent tasks – getting your service or product ready, studying how to boost sales, hiring people, pay utility bills, and more.
With all these things taking up your mind, time, and effort, some things might slip your mind that can prove to be crucial later on, things like insurance, for example—to be more specific about it, key person life insurance policy.
What Is A Key Person Life Insurance?
By definition, a key person life insurance policy means a life insurance policy secured on the life of the key person in a certain business. For small-scale businesses, the key person can mean the owner, the business founder, or a key employee. They are the crucial people in the business, those whose presence is so significant that when they are gone, the business might sink.
How Can This Insurance Help Your Business?
Key Person Insurance can keep your business alive when the CEO dies. This type of insurance is a kind of disability or life insurance on that key individual who plays a vital role in the survival of a business or organization. This is also paid for the company, with the same company as the designated beneficiary.
If the key person dies, the company is paid with the insurance premium, which can be used by the same to fund the business. It can be used to pay for business debts, investors, or the business’ daily expenses.
Aside from those mentioned above, here are the other three main reasons why your business needs a Key Person Life Insurance:
Business Can’t Go On When A Key Person Dies
Think about how much information and business knowledge each person in your company has. What type of industry do you belong to? Who are the key partners of your business? If an employee leaves, how fast can you replace them? Think about the revenue impact if these key people pass away. To get your business up and running even in the face of tragedies, get insurance for your key people.
Continuity Of Business Is A Major Concern
If you don’t have a continuity plan for your business, who will run the business if key people leave? In the case of family businesses, will the surviving spouse be willing to take over the deceased spouse’s role? Maybe the family member left doesn’t want to continue with the business. In this case, the insurance will take care of selling/buying issues.
Future Financing or Growth Needs
Financing institutions might require this kind of insurance before they can extend credit or any financing loans to the business. This reduces the risks of financing institutions by ensuring the longevity and stability of the business.
Seasoned and younger key business individuals will vary in coverage. Policy coverage will likewise vary from one organization to another, so it’s best to speak to an insurance agent from the Special Risk Team to get more personalized and detailed information.
Secure your business. Apply for a key man insurance policy today!
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