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Do you own a business that involves one or two key individuals? If the answer is yes, you should definitely consider purchasing key man life insurance.
How Can You Protect Your Company By insuring the “key man” in your company, you can financially protect your shareholders and prevent your company from going into bankruptcy if this individual dies. The main person may be yourself, your office manager, your most successful sales agent or even your marketing whiz. What is Key Man life insurance If your company’s success lies with one or two main individuals, you should buy key man life insurance. With this type of insurance, your company pays the premiums and is designated as the beneficiary if the key person or persons die. Who is Designated as the Key Man Many small companies rely on key man life insurance to ensure the business can continue running if the owner maintains relationships with vendors and clients. This does not mean that the owner of your company will necessarily be the key man. If you happen to retire and turn your company over to another important individual, that person may become the key man. Other companies will designate their top salesperson as the key man. One of the reasons is that clients may become so accustomed to dealing with that person that they may refuse to deal with another person. Another reason is that a smaller company may rely on a particular employee’s client relationships or vendor discounts to keep the company running. Key life insurance provides protection if that key person dies unexpectedly. What Happens to Key Man life insurance Benefits In a key man life insurance policy, the benefits are normally used to help surviving company members find and hire a replacement, pay off any outstanding debts, liquidate the company or divide the proceeds among shareholders. Business owners insure themselves because many of their employees may be dependent on their company, which may cease to operate if the owner dies without insurance coverage. A key man life insurance policy provides employees with a salary until they are able to find a new job. Does Your Company Need Key Man life insurance Smaller companies often provide a more relaxed, family atmosphere than larger corporations. Employees may be less concerned with mass layoffs if they work for a small business, and they often appreciate the flexibility offered by working for a smaller organization. For example, an individual with a serious health condition may be able to call in sick more often and a single parent may be able to take more time off to attend to a sick child. That’s why so many small business employees may remain with the company for their entire lifetime and become completely dependent on it for their financial survival. If you fail to purchase key man life insurance, you leave your dedicated employees at risk if the main individuals in the company die suddenly. Purchasing a key man life insurance policy will protect your employees, your company and your family members. |
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