Key person insurance can help protect your business. Business owners, founders, or other key employees are critical to your business and can be difficult and expensive to replace. The loss of such a person could also cost your business valuable long-term client relationships.
What Is Key Person Insurance?
Key person life insurance provides death benefits payable to the business entity. This benefit can help cover losses resulting from the death of a key person in your operation. This type of insurance is needed to cover individuals who are crucial to the business, its operations, and its long-term viability.
How Does Key Person Insurance Work?
The company purchases a life insurance policy on a key person or employee and pays the premiums. The company is the beneficiary of the policy. If the key person or employee should die unexpectedly, the payoff would go to the company with the purpose of helping it survive the loss of that key person, whether they be an owner, partner, key executive, manager, salesperson, or any other employee crucial to the organization’s operations, profit, and long-term stability.
Key person coverage is an asset for your business that contributes to the company’s creditworthiness. The cash value of the policy may also be available through a withdrawal or loan to your business if needed.
Key Person Insurance Costs
The cost of key person insurance depends on how much coverage is needed. That amount can be determined by how much your business would require to survive until the key person was replaced and the business was back up to speed. Our agents at Reese Insurance Group in Illinois and Wisconsin can help you find a policy that fits your budget and will handle your short-term cash needs if an unexpected tragedy should occur.