The majority of businesses will have at least one or two staff members without whom the business would suffer, and it is important to protect against their loss just like you would any other asset. Key person insurance is designed to do just that. Key person insurance is a type of insurance that compensates you financially should you lose one of your invaluable team members, or a business partner, through death or incapacitation.
Consider your most valuable staff members and what would happen if they were unable to work in the business suddenly and without warning. Some of the ways your business might suffer could include loss of sales or clients, financial disruption, loss of technical expertise and partnership or ownership disruptions if the person was a key financial partner or backer. Any of these losses could lead to significant financial difficulties for your business and key person insurance is designed to provide a short term financial stop-gap to help alleviate any difficulties while you find a replacement.
You can take out key person insurance for between $500,000 and $10 million, depending on how much you estimate the loss would be to your business if the individual in question was suddenly unable to work in it. Benefits can be used in a number of ways, including to find and hire a replacement, buy out the business share from the deceased partner’s family and to offset losses from any incomplete projects that the key member of staff was involved in. With any successful business, your staff members are your most valuable asset, so why not protect them accordingly?
Key person insurance is often overlooked, yet it’s a major means of safeguarding your investment and ideally, should be part of your continuity and disaster planning. Speak to us to learn more.
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