As the name suggests, “Key Man Policies”, protect an organization in the event of the death of the key employee. With so much to consider when running a corporation, this detail is often overlooked. If the success of your business rests heavily on the shoulders of key employees, as most do, now is a great time to look into key man policies.
Why Purchase Key Man Policies?
The Loss of the Business
Many small businesses are built and run by the founder who is the driving force behind the business. The loss of that key person may very well mean the collapse of the business. Having key man coverage in place can enable paying off debts, severance for employees and closing the business down in an orderly manner. Key man insurance allows for options other than immediate bankruptcy.
The Cost of Replacement
The cost associated with seeking out, hiring and training a replacement for one of your key employees may also be substantial. Not only does this process cost money, it can often take time. Having key man coverage in place can take the panic out of this situation and allow you to be selective as you seek a replacement.
Decline in Overall Efficiency
The loss of a key employee can also have devastating effects on the rest of your workforce. Losing the guidance and leadership on which they depend can cause emotional strain and lead to a decline in productivity. Many companies choose to buy key man policies to ensure they have the resources available to accommodate for an inevitable decline in performance in the wake of such an unspeakable tragedy.
As staff members deal with the grief and confusion associated with the loss of a key employee, business is often left on the table. Unfinished business and promises made to customers by the deceased are often inadvertently overlooked. Again, having the resources available to account for lost business is critical at such a time.
Financial Responsibilities to Surviving Family Members
Finally, the financial promises made to the surviving family of the deceased can be very taxing. Salary continuation or deferred compensation is often a contractual obligation that must come out of company funds, if a key man policy is not in place.
How Do Key Man Insurance Policies Work?
A key man insurance policy works in a similar way to other life insurance policies. The main difference is that instead of a policy naming an individual as the beneficiary of a policy the beneficiary will be the business where the key employee works. To secure a key man policy the business will take out an insurance policy on the employee, they will also be responsible for paying the premiums to keep the policy active. The policy will have the business named as the beneficiary of the policy and in the event that the key man passes away the insurer will pay the death benefit to the business to help cover expenses incurred as a result of the person’s death.
How To Find The Right Key Man Policy
To make sure you choose the right plan it’s important to calculate just how much money the loss of a key person in your business would cost the business. When you know the coverage level that’s right for your business you should compare quotes for multiple plans. The cost of key man life insurance policies can vary greatly between insurers, which makes it hugely important to compare quotes from multiple insurance companies to find the best coverage option for your needs. To help you find the best life insurance for your business IntelliQuote offers an online quoting service that lets you instantly compare plan options from the best-rated insurers in just a few minutes.
Get Instant Quotes For Key Man Policies
The premiums associated with key man policies are minimal compared to the great expenses you will face in the event of a tragedy. Interested in learning just how affordable key man policies can be? Contact us today. Allow one of our highly skilled, licensed agents to help you compare life insurance rates, coverage and more.
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