Key Person Life Insurance provided by Altima Auto Insurance Agency
Most maturing small businesses have a core group of key individuals who are absolutely essential to the profitable operation of the company. The premature death or disability of one of these key people could create negative impacts. Key person insurance is designed to protect your business by giving you the financial resources to regroup and get back on track
What is Key Person Life Insurance?
Key person insurance is a type of life insurance policy that provides a death benefit to a business if its owner or another significant employee passes away
Key person insurance may make sense in many circumstances:
If the business is a partnership and each partner wants to be able to buy out the other's shares in case of an untimely death.
What does Key Person Life Insurance Cover?
There’s no set formula for deciding the monetary value of your key person insurance. You may want to start by considering the financial effects a key employee’s death would have on your company.
For instance, if you’re a sole proprietor buying key person insurance on yourself, you may want enough coverage to help your heirs close your business and pay off any company debts. If you own a larger company and are insuring a key employee, you may need enough coverage to replace that person’s sales income, for example, or to provide a financial cushion while you search for the employee’s replacement.
Who owns the Key Person Policy and who benefits?
How your policy is structured may depend on your company’s legal structure. Typically, the company pays premiums for the key person policy, and also owns it and is the beneficiary. The key employee must provide consent, in writing, to your company owning the policy.
If you have key people who are irreplaceable or whose contributions are so crucial that without them your business might fail, key person insurance can provide the money necessary to recover and rebuild in the event of their premature death. Connect with us to know more !