Add Value To Your Maturing Business With Key Man Insurance

Most maturing small businesses have a core group of key individuals who’re completely indispensable to the profitable operation of the organisation. The untimely demise or disability of one of these important people could cause negative impacts far worse than regular business challenges, such as changes in the economy, or falling customer demand, or even legal issue.

In some scenarios, the loss of a key person could mean the downfall of the organization. Key man insurance is designed to safeguard your business by offering the monetary resources to regroup & get back on track.

What’s key man insurance?

Key man insurance is life insurance on specific crucial employees, usually the owners, founders or chief executives – the people who’re critical to the survivability of the company.

Unlike personal life & disability insurance, the business purchases a key person policy, pays the premiums and is the beneficiary. If the covered employee passes away, the business gets the insurance payoff.

Insurance proceeds can be employed in different ways, including offsetting everyday operating expenses, paying off debts, supplementing lost revenues until a replacement can be hired, or, in extreme circumstances, allocating money to investors, paying compensation to other workers and closing the business down in an organized way.

How key man insurance can add value to your maturing business?

Having key person insurance in place may make it easier to avail certain kinds of financing or credit from banks, or mixtures of capital from investors, since it aids to reduce business risks. If your organization merges or goes public, you may be needed to have key man insurance on top executives.

Taking out key man insurance makes a conclusive statement to the employee regarding his or her value to the organization. This can reinforce the relationships and aid in retaining these important people. You also have the option of offering part of a payout to the family of the employee. This makes the coverage part of the employee’s benefits package.

A policy that includes a cash value may give the flexibility to take a withdrawal or loan against the insurance if your business requires cash.

If you’ve plans to sell, merge, or otherwise transition your business, key man insurance is a critical additional layer of business continuity protection that may also aid boost your company’s value. Talk to a team of experts, including finance, insurance, ta, investment, and legal, to assure your transition is a smooth one and help determine if key man insurance is appropriate for your business.