The Gap in Protection You Can’t Afford to Miss
Behind any successful businesses is a strong team of highly invested, committed people, without whom the business wouldn’t succeed in the same way. Are you picturing any of your own team members?
Now imagine something happened to one of those key people in your business. What would be the true cost of replacing that person’s expertise, knowledge, and level of insight? Though you can’t prevent every negative possibility, you can help protect your business.
Key person insurance is a simple, efficient way to provide your business with the funds necessary to handle the loss of a key employee and recruit and train a replacement.
In a nutshell, it’s a life insurance policy on the key employee, paid for by the business. As the policy’s owner and beneficiary, the business receives the proceeds (generally income tax-free) upon the death of the key employee. Proceeds may include:
- Immediate cash after the death of a key employee
- Cost-effective liquidity for operational costs after the loss
- Conversion of policy cash values into an asset on the business’s balance sheet
- Access to policy cash values during the life of the policy that may be used for various business needs, including informally financing executive benefit programs
- Significant death benefits in some cases, including low-cost term or permanent policies
Key person insurance is simple to implement and maintain, and it offers other potential benefits as well. Policies can even be used to fund a retention bonus plan as part of your employee retention efforts for the most valuable members of your team.
Ready to take the leap and secure key person coverage? Take care to consider which type of insurance and funding method is right for your business, and talk to your advisor to secure protection for your business today.