Protect Your Business with Key Person Coverage
Every business has employees critical to its success and growth—whether they are owners, executives, or employees with unique skill sets. The loss of a key person due to death or a critical illness can cause significant disruptions, including:
Potential Impacts of Losing a Key Person:
• Loss of Revenue: Loss of key accounts or inability to drive growth initiatives.
• Business Continuity Concerns: Reduced creditworthiness and higher costs for future growth.
• Employee Morale: Other employees may worry about the business’s viability.
• Replacement Costs: Hiring a replacement can take months and cost 50-200% of the lost employee’s annual salary.
Benefits of Key Person Life Insurance
Key Person Life Insurance provides a safety net for businesses by offering:
1. Death Benefits: Generally tax-free funds to cover financial losses and replacement costs.
2. Cash Value Growth: Enhances business creditworthiness and provides access to funds if needed.
3. Flexibility: Can also serve as an employee retention tool.
How It Works:
1. Identify key persons and their financial impact on the business.
2. Obtain the key employee’s consent to purchase life insurance on their behalf.
3. The business owns and pays premiums on the policy and receives the tax-free death benefit if the key person passes away.
Real-World Example:
A small software company generating $4 million annually relies heavily on their director of business development, who contributes 25% of the company’s revenue. By purchasing a $1 million life insurance policy, the business protects itself against financial disruption, ensuring it can continue growing even if the key person is no longer available.
Secure Your Business’s Future
Protect your business from the unforeseen loss of a critical team member. Key Person Life Insurance ensures your company remains resilient, safeguarding both your current success and future growth plans.
Contact Christopher a licensed professional at estatechecklist.com or estatechecklist @gmail.com to explore how Key Person coverage can benefit your business.