Key Person Insurance
Business owners and other key executives spend considerable time and effort to acquire the knowledge, experience, judgment, reputation, relationships and skills that make them a valuable asset to the business! If one of these key people dies, becomes disabled or critically ill, the business loses a key member of the management team and this can have a severe financial impact!
During the disruption that follows the death, disability or critical illness of a key player several things can happen as follows:
- The business will suffer from the loss of knowledge, expertise and management capability.
- Lenders may cut back credit.
- Creditors may press for immediate payment.
- Debtors may delay making payments.
- Employees and customer may lose confidence in the business.
- Competitors may take advantage of the situation.
Unfortunately, finding an immediate replacement for such a valuable resource that maintains the same qualifications of the key person being replaced can be extremely difficult. It usually is very costly in terms of actually finding and training that someone new, as well as meeting their income requirements.
During the time necessary to search for a replacement, the business will experience delays, disruption and reduced efficiency which could result in weakening the financial stability of the business. The impact of such a situation can be considerably reduced if the business has succeeded in establishing a proper plan prior to this event of loss.
This key person business plan should include the purchase of Insurance policies whether life insurance, disability insurance or critical illness insurance to ensure that there will be immediate cash to cover the business’s working capital needs and to find and train a suitable replacement for the person lost. The value of these benefits to the business should far exceed the cost of the insurance!!
Let Health Risk Services assist you in making KEY PERSON insurance part of your business plan!
DISCLAIMER: Please be advised that the information on this web site is intended to present a broad variety of general information as simply and accurately for your knowledge as we possibly can. In no event does this information form part of or apply as a legal document. Therefore, please note that rules, conditions and industry practices discussed may be changed over time. Please consult Health Risk Services Inc. with specific questions.
E & O Insurance applies