Key Person Insurance

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How Key Person Insurance can help your business’s financial success.

Every business has key employees whose death or injury could significantly impact the company’s financial future. Protecting one of your most important business assets – your people is essential.

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What is Key Person?

Key person insurance, also known as key man insurance or key employee insurance, is a type of insurance that a business purchases to protect itself against the loss of an essential owner or employee. It comes in three types: life insurance, critical illness insurance, and disability insurance.

  1. The first type, which is key person life insurance, provides financial assistance to the business in case of the death of an important employee, such as a sales manager. The life insurance proceeds can be used to hire and train a replacement, ensuring the business meets its financial objectives.
  2. The second type, key person critical illness insurance, provides a lump sum payment in case the sales manager falls ill and cannot work. This payment can help cover any financial losses or lower productivity from their absence.
  3. The third type, key person disability insurance, provides financial assistance if the sales manager becomes disabled and cannot work. This type of insurance can help the business continue to provide a salary to the sales manager until they recover or reach the age of 65. Additionally, it can help cover office expenses and salaries during the duration of the disability.

All in all, key person insurance safeguards businesses against losing their vital employees and ensures their continued success.

Collateral Assignment

Life insurance can serve a dual purpose of safeguarding your business and helping it secure loans. At times, during the early stages of your business, you may not possess the conventional assets required to secure a loan. This is where collateral assignment comes in.

Assigning a third-party lender as the primary beneficiary of a company-owned life insurance policy can be used as collateral for a business loan or line of credit. The lender can collect a portion or the entire policy during the loan’s duration. Additionally, in case of any unfortunate incident before the loan is repaid, the lender can claim the policy.

Life Insurance Info

We tend to think of life insurance as income replacement; it is one of its primary purposes in many cases. If your loved ones depend on your income for their daily needs, life insurance offers you the peace of mind that they’ll have the financial support they need when you’re no longer here for them. Life insurance can help cover final expenses such as funeral costs and debt/loans such as your mortgage, to name a few examples.


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Critical Illness Insurance

Critical Illness coverage offers financial compensation for cancer, stroke, heart attack or other debilitating illnesses. Such illnesses can sometimes require recovery costs and even force a leave of absence from work. Therefore, when establishing your policy, you can choose the coverage that meets your specific needs, as recovery costs can vary.



Disability Insurance

Disability coverage replaces some of your income if you can’t work because of an injury or illness. This monetary benefit will continue until the benefit period ends or you return to work. It can help you and your family pay for necessary expenses like your mortgage, car payments, utilities, groceries, etc.



Group Benefits

Every business, regardless of size, should have a Group Benefits plan. We proudly work with various insurance carriers, allowing us to custom-build a plan that perfectly fits your needs and budget. It benefits your employees to get coverage at a reduced cost compared to most personal plans. Help reduce financial stress if something happens to protect your employees and their family’s health.

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How can life insurance for a key person protect your business?

Having suitable insurance coverage can offer you the following benefits:

  • Safeguard your business when you or a vital employee confronts an unexpected inability to work.
  • Ensure the payment or clearance of a business loan, commonly called a collateral assignment.
  • Assist you or your business partner in obtaining funds to purchase the other party’s share of the business if one of you departs. Although several financing approaches exist, life insurance is often the most cost-effective, straightforward, and reliable method.
  • Cover the expenses for you or your family in case one of the parties involved departs.

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Three vital takeaways to remember about key person insurance.

  1. Key person insurance is a type of insurance companies purchase to protect the life or health of an important owner or employee who is vital to the business’s success.
  2. By using collateral assignment, this insurance can also assist your company in obtaining loans.
  3. In addition to having key person insurance coverage, business owners should also contemplate obtaining personal life insurance. In the event of an unforeseen circumstance, life insurance can provide financial support to your loved ones by aiding in paying personal debts, such as a mortgage, financing your children’s education, and replacing your income to cover household expenses.

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