Key Man Life Insurance
If you own a small to medium size business, key man insurance is very important because its success or failure usually depends upon a few key individuals that drive the revenues for your company. The loss one of these top people due to a death or disability can devastate your business and ultimately lead to its downfall. Key man insurance is designed to protect your company from the threat of one of these losses and will help provide the funds needed to continue successful operations.
What is Key Man insurance?
Key insurance is simply life insurance and/or disability insurance protection that you purchase on your key people to protect your company in the case of an untimely death or disability. Key employee or key executive insurance will give you the peace of mind knowing that your company can continue without interruption if one of your key people goes down. If death or disability strikes a top sales person or executive, key man insurance could be the difference between your business staying afloat or having to close the doors!
Key person life and disability insurance protects your company not the key person. Most key man insurance policies are purchased by the business with the business being the beneficiary and the policy owner. With key insurance in place, if a key employee dies or is disabled, the insurance proceeds are payable to your company and can be used for any purpose. Common uses for key insurance policy proceeds include covering expenses associated with finding a capable replacement and to provide cash flow needed for ongoing business concerns.
Does Your Company Need Key Man Insurance?
If your business would be significantly affected (loss of revenue or customers) if one or more of your key employees becomes disabled or dies, you should consider purchasing key man insurance. Companies of all sizes buy insurance but it is especially important for smaller businesses that have considerable exposure if one key man is lost.
Key insurance is also purchased on the lives of business owners to efficiently plan for business succession. Key life and disability insurance is a perfect tool for buying-out the interest of a deceased or disabled owner's family. In the event of a death or disability, the company can redeem the outstanding shares of the business from his or her estate effectively paying fair market value to the heirs while at the same time retaining current ownership. Many successful business have buy-sell agreements in place funded with life and disability insurance specifically for this purpose.
Buying Key Man Insurance
Buying key man insurance is relatively easy and in most cases extremely affordable. The process is the same as purchasing individual life and/or disability insurance. A simple application for insurance on the life of the key person is completed and submitted to the insurance company. A routine insurance exam or "mini physical", which is paid for by the insurance company, is required along with some financial information on the business. The underwriting process, takes about 3-6 weeks and upon approval a policy is issued. Finally, the payment for the first premium is all that is required to make the coverage effective.
If your company relies on one or two key people for a large percentage of sales or revenue, the loss of one of these individuals could mean the end of your company. Key life and disability insurance is an easy and affordable way to provide peace of mind to you and your business. The price for key insurance is far less than the loss of your company due to a lacking of smart financial planning. For more information contact MEG Financial today at (877) 583-3955 or get an instant key man insurance quote now!
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