Do you know what Key Person Life Insurance is? If you’re a business owner, this policy is imperative.
Key Person Life Insurance is a life insurance policy purchased by a company on the life of the business owner, top executive, partner, or any one else who is critical to the success of the business.
If you are a business owner, can you imagine what would happen if a key person in your company were to pass away unexpectedly? How would this impact your business, your employees, your family, etc? This is where Key Person Life Insurance comes into play.
How does a Key Person Life Insurance policy work?
The company (not an individual), purchases this policy on a specific employee. The company pays the premiums and is both owner and beneficiary on the policy. If that key person were to die, the company would receive the proceeds from the policy.
What can the death benefit pay for?
The money can be used for a wide-range of things, including:
- Recruiting, hiring and/or training of a replacement employee
- Pay off business debts
- Pay investors
- Buyout the surviving family member’s ownership (as part of a buy-sell agreement)
- Off-setting day to day operations
- Supplementing lost revenue
- Costs associated with closing the business
What is the cost of Key Person Life Insurance?
The amount of coverage you need depends on the size of your company, the type of business that you run, and the key person’s role in the business. And – just like regular life insurance, the cost of coverage varies on the age and health of the person the policy is being taken out on.
If there is a situation in which the absence of a person in your business would cause major financial harm to the company, Key Person Life Insurance should be purchased.
Our business insurance experts are ready to help you navigate Key Person Life Insurance. Give us a call or start your complimentary business insurance proposal here.
A little more about The Agent Insurance Services…
The Agent Insurance Services is a full-service independent insurance agency. This allows us the ability to offer a full range of protection such as home and auto insurance, commercial insurance, and life insurance to all of our clients. To put it simply, we make sure our clients have the same coverages we have. Why would you want anything less? Our exceptional team of Protection Advisors offers professional advice and service you can afford. Please call us and tell us what is important to you. We’ll do the rest.
