Insuring a Key Employee Can Protect Your Small Business
Small business owners like you know the value of an employee who makes the company tick. She’s the person you and everyone else rely on and the key person who plays a crucial role in the daily operations and future success of your company. To protect your investment and long-term financial goals, you should consider a keyman insurance policy.
With a keyman insurance policy, your company is the beneficiary. In the event that a dedicated and trusted employee dies unexpectedly, or becomes disabled, you can count on financial support to fill the gaps. Too often, the passing of an essential member of the company spells disaster for a small business. A key man insurance policy provides crucial financial relief during a time of loss that affects you and your employees.
Keyman insurance is a policy owned and paid by your company to cover one irreplaceable staff member.
Policies generally refer to life insurance, but may include disability coverage, too. Both types of insurance can help offset the costs of an unexpected loss or absent employee.
When choosing your key employee, you should rely on individual knowledge related to performance and skills. Every employee is a valuable asset to your company, but in some instances, there’s one or two especially essential people who play a major role in the company by making vital and sustaining contributions. The key employee you choose to insure may be the person who:
- creates direct earnings and profits
- secures and develops relationships with important clients
- possesses a special talent or knowledge that drives your business
Because of the employee’s special influence in daily business operations, replacing her may be especially costly. Your keyman insurance policy will account for any potential loss, enabling your company to rebound following a death or disability.
Plan keyman life insurance Coverage Around Your Business Needs
When you’re shopping for a key man policy for your small business, consider these factors:
- What will it cost to hire and train a new employee?
- Will there be a loss of productivity and income?
- How much can the business afford in premiums?
Ask your agent for a variety of different quotes and options from whole life to term policies. Remember, you’re protecting an investment you created. Other employees and people in the community depend on you to be able to keep going — even after a tragedy. You can’t plan for every unexpected event, but you can be prepared.
Sometimes the death of a close employee may present hidden or unforeseen expenses. Know your company and your employees. Consider how other team members, regular customers, and the employee’s family will react when planning how your business will carry on.
It is impossible to put a price on human life, or an individual’s valuable contribution to your business. However, being prepared with an affordable policy and added coverage can reduce the impact of an unexpected and untimely death.
Key Person Insurance Demonstrates Your Compassion and Responsibility
Purchasing a life insurance policy on an employee is more than just smart business practice; it is a demonstration of personal involvement and appreciation for an individual’s contributions to your company’s goals. Additionally, it shows your compassion and a human consideration for unexpected life events that may affect everyone close to your business and employees. And remember to make sure you have group term insurance for the rest of your employees as well. It’s surprisingly inexpensive and can truly make a huge difference in employees’ live if something catastrophic happens.
There are many personal stories about businesses responding to the loss of a standout employee. Advance planning with key man life policies will enable you to go the extra mile when tragedy strikes. In the end, offering a family some unexpected financial assistance, providing for a survivor’s special needs, or allowing other employees the opportunity to grieve by taking time off will be the greatest benefits to your business.