No company wants to imagine losing one of its most significant contributors, but unfortunately, it can happen. Your team would be left with the question: Could your business recover from the loss of a key employee?
Some companies would struggle to cover business expenses if a key person were to pass away. In the most extreme cases, a company may even go out of business. Keyman insurance can help protect your company from losses.
Many of our clients wonder who qualifies as a critical employee. Technically, many people within a company could be considered key people. In the broadest terms, a key person is someone who contributes so much to your company that your business would be significantly affected if they were to die.
Key employees often provide an advanced and unique skill set. Their work and role are critical to the business. Examples of key employees include:
The individuals on this list contribute significantly to the company’s success. If one of these employees were to pass away, a company or small business could struggle to stay on its feet. In fact, some may even be at risk of declaring bankruptcy.
At Best Life Insurance, we know no two companies are alike. So, your company will have a different number of critical employees than another business. Further, your business will rely on each of your key people to a different extent.
So, key person life insurance coverage that one small business needs would be too small or large for another company. That’s why Best Life Insurance listens carefully to your company’s direction and offers multiple policy options. We’ll sit down with you to discuss the right path for your business.
Our two primary categories for keyman life insurance include term and permanent policies.
Our term policies will insure your key person for a set period. Best Life Insurance offers policy term lengths for 1, 5, 10, 25, 20, or 30 years.
Sometimes, a key employee needs to be insured for their whole life. Our permanent keyman policies will cover your key person and build cash value to keep your business flowing.
Some of our clients only need term life insurance for their key people, but other clients prefer to have a permanent policy. Each policy offers different benefits, and your policy length is based on your company’s needs and goals.
Our term keyman policies are ideal for small businesses or companies with a key employee close to retirement. Term policies are less expensive than permanent policies. At Best Life Insurance, you can select a term length as short as 1 year or as long as 30 years.
Many of our clients prefer a term policy because the premiums are more affordable. Further, our clients often won’t need the insurance for very long and don’t need to generate cash value. In these instances, a term policy would be ideal.
Clients who choose term keyman policies often:
Best Life Insurance’s permanent policies offer coverage for the lifetime of the key person. Our clients feel more secure and prefer to have stable premiums.
Another benefit is that our permanent policies will build cash value over time. So, if you choose to end the coverage, you can receive an excellent return.
Clients who choose permanent keyman policies often:
Know the key person is young and intends to stay for many years
Like all life insurance policies, key person insurance uses three main stakeholders: the policy owner, the insured, and the beneficiary.
For key person insurance, policy owners or holders are usually one or both founders, the president, etc. The owner is the person or entity representative who signs the keyman insurance policy and pays the premiums.
The insured person is your key employee. Your company will pay premiums based on your insured’s health, lifestyle, and other typical life insurance qualifications.
Finally, the beneficiary is the person or entity that will receive the payout, or death benefit, if the key employee dies while the policy is in effect.
The most well-known reason for purchasing key employee life insurance is to receive a payout if the individual should pass away. Your company could use your benefits to help pay off a loan or bide some time for the company to hire a replacement.
Aside from a payout upon a key person’s death, there are other reasons to buy term or permanent life insurance for your key employees. For example, small businesses that wish to enroll in a Small Business Administration Loan have to buy key person insurance if they don’t have enough collateral. In this case, the key person insurance backs up the approved lender, should the small business owner default on their loan.
Another reason to purchase key person life insurance is to generate cash value. Businesses can then sell the policy and receive the payout.
Best Life Insurance has a team with over 15 years of collected experience in the Industry. We always begin our consultations by listening to our client’s needs and goals. That way, we can work with you to create a personalized policy that will guide and secure your business.
Our agents will also let you know if you would receive a much better benefit from a different type of life insurance policy. For example, if only one person owns a small business, they would likely be better off getting a personal life insurance policy. That way, the benefits would go directly to their family.
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