Every business has an important figure who is essential for the company’s smooth functioning. Key man insurance is a life insurance policy that businesses purchase to indemnify the financial loss due to the absence of the key employee. In this blog, we’ll discuss the basics of key man insurance, its benefits, and how it works.
Who is Considered a Key Man?
Key men or key employees are assets to any business because their knowledge and skills are crucial to generating revenue and ensuring the success of the organization.
Some examples of key employees include founders, owners, CEOs, and Business Development Heads.
As you can imagine, losing a key employee can be a heavy blow to any organization. That’s where Key Man Insurance kicks in, helping limit damage and providing peace of mind.
Benefits of Key Man Insurance
In addition to providing protection and peace of mind, key man insurance offers a range of benefits, including:
- Crucial Decision-Making. Loss of a key employee can create chaos in the company, but with key man insurance, you will have funds to hire an experienced replacement without losing time or money.
- Credibility. Key man insurance policy can increase your business’s credibility in the market. Potential investors or lenders are likely to feel more confident about investing if they know that your business has protected itself from the loss of an essential employee.
- Avoid Legal Issues. If your key employee’s unexpected absence results in a lawsuit, key man insurance can help pay attorney fees and any financial liabilities that may arise.
How Does Key Man Insurance Work?
It’s easy: Key Man Insurance works like a life insurance policy.
A business purchases the policy on the life of the key employee, pays a premium, and names the company as the beneficiary.
In the event of the key employee’s unexpected demise, the company receives the insurance proceeds which can be used to help with the operation of the business, pay off debts, and cover other expenses.
What To Consider Before Purchasing Key Man Insurance
- The key employee’s contribution. Evaluate your key employees and determine their overall contribution to the business.
- Policy Amount. Decide on a policy amount based on the financial impact that the loss of this key employee will have on your business.
- Premiums. The premium charges on key man insurance vary depending on the policy amount, age, and health of the key executive. Get a quote from different insurance providers and evaluate the best option.
Need Key Man Insurance? Uniserv Is Here To Help
Whether it’s life insurance or business insurance, we offer a wide range of insurance solutions to protect the things you value the most.
We serve companies and individuals all over California. Call 888-698-6473 today or fill out the contact form to get the dependable protection you deserve.
