Request Key Person Insurance Quote, Business growth has been made by hiring outstanding people and people are, to varying degrees, what drives the profitability and success of your company. And that is where key person or key man insurance can help you find and hire this new person and bring them up to speed in your company. Moreover, it must compensate for any drop in sales and profits in the course of this process.
Enough key man insurance can have several benefits.
If this is someone known to your bank it may make them a bit jittery about your line of credit. If that is an issue, earmark money to pay down it.
A few key clients may have even an objection that may be overcome by being aware that there was a cash infusion to find a well qualified person quickly.
In case, your key man is also a shareholder you need to having life insurance which should give cash to buy back the shares of all principal shareholders after their death (which would be over and beyond a key man insurance as you would still have to replace them) from the estate.
Establishing Key Person / Key Man Insurance
First, speak to the person(s) you plan to cover
Ensure the key person will sign an insurance application that does not directly benefit themselves. This is something I’ve really had key people reluctant to do and we’ve been asked to counsel them about concerns.
*Determine how much life insurance will be needed on the key person/man insurance.
Some considerations are;
Hiring a new employee – if you use a head hunter to get a qualified replacement you are looking at six months salary.
Regardless of your future staff, you will have to pay the new person 6+ months until they become effective
Cost Temporary Employee if needed – If you need something else done during this time, if you lose a key person in admin example finance you still need this work done during the transition. \ If sales are going to be impacted badly you need to account for that risk as well
The loss of sales and profits during the replacement period which might even be a year or longer.
Choose the type of life insurance to buy. A ten year term policy is the best and least expensive solution, although some have bought a universal or whole life policy as an incentive to commit to the company over the long haul. If that might be of interest to you, we would welcome a conversation on this.
Get a quote to find out its cost. To pay this peace of mind will not be too much. We have expertise in key man insurance
Our employer was the importation of safety supplies, but there was one employee who was responsible for over 50% of the company’s sales because of his time in the industry and unique sales skills. Key Person Insurance Quote The owner estimates that in the event of his untimely demise, sales would drop by about 30% and that it would be quite difficult to find his replacement. So, we needed to write a covering letter to the insurance company outlining the rationale behind the more-than-twice-this-person’s-salary key man coverage, but we were able to secure coverage in excess of $700,000 for this key man.
We pay substantial premiums at the building and other assets level to hedge against the risk of a major fire, an asset property damage problem or potential liability problem but the risk of a key man having cardiac event or the like is far greater than consistent with possible similar loss. This is also included in your risk assessment to secure this risk.
If you have any questions we would be glad to discuss with you. Either give us a call at the telephone number above or complete the subsequent form and we will be in contact shortly.