Organizations, both large and small from all industries, all have key team members that keep their business both viable and profitable. Whether it’s your CFO keeping you tax compliant, your customer strategy leader keeping your customers happy, or even your production team members keeping your supply chains in tact it’s important to understand the consequences if key team members are lost. We have all heard the phrase “you are only as good as your people”.
In the environment in which we are living, protecting your business in the wake of losing key team members is imperative.
Key person life insurance strategies enable business owners to protect their businesses, leveraging tax free life insurance to assist with recovering from the financial loss resulting from losing key team members. The life insurance is set up with the business as the owner of the policy, the employee is the insured, and the business is the beneficiary. The type of life insurance, term or permanent, varies based on how the business wants to structure the program.
More carriers have created accelerated underwriting programs due to COVID-19. This means implementing insurance in the current environment may be quicker, easier, and less invasive (i.e. medicals may not be required).
Here are the six key things to consider as you think about your key person life insurance strategy:
- Who are your key team members that keep your business viable?
- Do you have enough capital to cover an emergency due to losing a key team member?
- Will this impact your brand?
- Will business loans be affected?
- Is there a succession plan in place?
- Can your competitors take advantage of this situation?
A small business client was looking to ensure they had protection for the business if they were to lose the owner/founder, whom is not immediately replaceable.
Through a simple key person life insurance policy, the business protected itself up to 5x the financial loss they would have faced if the owner/founder passed away from COVID-19 complications.
In times where losing such key team members is devastating, financial protection was able to lend some degree of assurance and of course protection.
LG Insurance Inc.