Benefits & Financial Services

Key Person Insurance

Providing Protection for Your Company’s Future

What would happen if a key executive or key employee were to die unexpectedly? What if key leaders or sales people were killed in a plane crash? Who would lead the company, and what financial impact would there be? It is important to have a plan in place for these kinds of situations. While insurance on the physical assets of a company is important and may be required by your lenders, are you protecting your most valuable assets – human capital? We specialize in helping companies of all sizes plan for these types of contingencies and fund those plans with innovative products like key person life insurance.

What is Key Person Insurance?

Key Person, which is also known as “key man insurance” and “key employee insurance,” is coverage that helps protect businesses in the case of the untimely death of a key person in the organization. It helps provide financial peace of mind to the owners of a business – including shareholders – knowing that a capital infusion will be made just at the time when it may be needed most.

Who may be considered key people?

For the most part, anyone you consider to be key to the operation of your business and whose loss would result in a significant financial impact would be considered a key person. These people often include business owners, sales people, or executives whose skills, talents and expertise are crucial to the continued growth of the organization.

Who needs key person insurance?

Key person insurance can be necessary to a broad range of companies for many reasons. However, it is generally most critical for small- and medium-sized businesses where the success of the organization rests on both the talents and expertise of a select number of individuals. The death of one of these key individuals could have a significant impact on the organization and, without an infusion of capital, could lead to the demise of the business. Life insurance proceeds can be used by the business to attract new talent to replace the deceased employee, offset lost revenue, satisfy contracts and reward key employees with additional benefits while still living.

How much key person life insurance is needed?

It can be hard to put an exact monetary value on individual contributor, and there are other financial considerations to consider, such as how much the insurance coverage may cost. We consult with our clients and often bring in their other advisors, such as their CPA, in order to arrive at an appropriate amount of coverage that balances the future needs of the business in the event of a premature death while keeping in mind current fiscal restraints.

Key person insurance is the most cost-effective way to reduce the financial impact associated with the premature death of a contributor to your company. Ask us for more information about how key person insurance can help ensure the future of your organization.

Key Person Disability

Did you know that the average American is 3 times more likely to suffer from an extensive debilitating sickness or injury than they are to die before reaching age 65? Despite this statistic, disability coverage on key employees is frequently overlooked by business owners. Close your eyes and imagine your top producer was unavailable to land that next big contract or unable to service that top revenue account. Would your bottom line shrink? Could that account become vulnerable to your competition?

Many companies will use disability coverage proceeds to raise cash in just such an emergency. The money can allow your business to offer incentives to quickly attract new top talent with little disruption to your top prospects and clients. When discussing business risk, it’s important to keep in mind the financial burden posed to your organization if a key executive or sales person were to suffer a tragic accident or extensive illness and to remember to cover this risk.