Key Person Insurance
What is key person insurance?
Essentially, this is life insurance which covers the primary or key person within a business; it is also known as key man insurance. This inclines to be the owner of the business, the founder, or even a key employee. It can cover people, or the individual who is essential to the success of the company. For example, if they were not present, or absent, could potentially result in the end of the business.
Do I need key person insurance?
It depends completely on the stage that your business has reached as to whether this insurance is relevant of not. If you have a key person within your company, they may, for example, hold a specific skill, such as the only programmer for a small IT business. Their experience and network could be crucial to the success of your business. Regardless of the person, or whether the reason they are key to your business is due to financial, or even if it is skills related. If the loss of that person would damage your business, resulting in lost profits, customers, or could result in a major disruption to the business plan, then key person insurance for your business would be a great addition. Perhaps, in the case of a company director, who may have a company loan, in the event of their death, these loans will become immediately payable. These are the prospective reasons why taking out key person insurance, could be a considerable option for your company.