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Key “Man” Protection
If you’re a small business owner, chances are, you’re well aware that your business may be more sensitive to change than are larger businesses. Change in the economy, interest rates and customer demand can have a significant impact. Have you considered what could happen to your business if you or one of your business partners suddenly became disabled or died?
When a business owners leaves the business unexpectedly whether by death, or disability, the business can come to a halt unless you have the right mechanisms in place to ensure that your business will continue.
Since each key person in the business plays a unique role that directly affects the bottom line, you should develop financial strategies to keep the business strong, particularly during key person succession.
Key Man
Key person, actually. Key employees either have a unique skill set or a strategic client base, or other business relationships that are critical to the success of the business. They are key employees because without them, the business could be critically impacted.
If the success of your business depends on a few key people, you should consider a key person insurance plan. Key person insurance can take several forms, but most commonly it is a life insurance policy on the lives of your key employees with the business as the beneficiary.
Why should a business benefit if someone dies?
Key person protection helps offset the costs the business can incur if that person should suddenly die. The benefits can help your company:
- Cover recruiting costs
- Provide temporary operating costs to bring the deceased’s long range programs to fruition, and
- Create financial “buoyancy” assuring creditors that the business is still viable
There are many ways to protect your business from the loss of a key employee. Your financial professional can help you explore all the details that may impact your particular business, and then suggest a solution that works best for you.
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