Do you have a select group of employees that you find to be a primary reason for your positive productivity and business successes? Do you believe that without these key individuals or individual, your business wouldn’t be where it is today due to their expansive knowledge and skill?
With a proper broker partner, many businesses have successfully protected themselves against physical losses and liabilities. However, have you considered the loss of a human asset? How might the loss of a key executive or team member affect your business? There are many things to consider especially since many business owners are unaware that covering this type of asset is even possible!
Ask yourself a few questions to see if protecting yourself against the loss of a human asset would benefit your organization:
- Do I have other team members that can fill these shoes adequately? Not only CAN they fill these shoes, but do they have enough hours in the day to do so combined with the proper resources?
- Or do you have to train a new team member, how will that affect the company?
- Would this impact my current client base?
- Will this affect the prospect of new sales?
There are a few ways that you can go about protecting against this risk. Two ways are Key Person Life Insurance & Key Person Disability Insurance
How Key Person Life Insurance works
As there are many different types of plans and policies to implement to protect against this risk, the essential goal and definition of such is as follows.
Key Person Life Insurance is a policy put in place that is owned by a business rather than by a particular individual. The policy insureds are key employee(s), yet in the event of a passing of a key employee, the death benefit is paid to the business. The goal of such a policy is to protect the business against the loss of human assets. The benefit can do multiple things for the business such as paying for the cost of a replacement and training that particular individual to fill those shoes and can also reinforce credit lines of the business.
How Key Person Disability Insurance works
Similar to Key Person Life Insurance, a business can protect themselves against the loss of a key employee. In this case, an employee has become physically and/or mentally impaired and cannot perform the natural duties of their job. Upon this disability, the disability monthly benefit is received by the employer rather than the employee. This income can be used to fund any losses incurred by not having such a key employee at work and can also pay for the training of a replacement employee.
Gauging your immediate need for personal life insurance and disability insurance is one step towards individual financial security. But what about business financial security, these are your solutions. They can strengthen company cash flow and credit lines and can aid in the hiring and training of a new employee. Consider this option! Sit down with an advisor.