Most maturing small businesses have a core group of key individuals who are absolutely essential to the profitable operation of the company. The premature death or disability of one of these key people could create negative impacts far worse than typical business challenges, such as changes in the economy, or falling customer demand, or even legal trouble. In some cases, the loss of a key person could mean the demise of the company. Key person insurance is designed to protect your business by giving you the financial resources to regroup and get back on track.
Key person insurance is life insurance purchased by your business on specific key employees. The company pays the premiums and receives the insurance payout. Think of it as life insurance for your business.
If you have key people who are irreplaceable or whose contributions are so crucial that without them your business might fail, key person insurance can provide the money necessary to recover and rebuild in the event of their premature death.
Key person insurance may improve your company’s creditworthiness because it helps to lower business risks. If you have plans to sell or transition your business, the extra layer of business continuity protection can help facilitate the process.