What is Key Person Protection ? This type of insurance allows a business to insure itself against potential financial losses should a key person leave . The proceeds of a key person protection policy are directly paid to the business to help hedge against the financial impact of their death or illness , per the terms of the policy . This helps compensate for the loss of their unique expertise and leadership .
Who is a Key Person ? Whether the departure comes from an illness or death , this talented individual ’ s absence would significantly impact the company ’ s bottom line . It could be key personnel whose skills , experience and knowledge affect revenue and future sales such as as the following :
• Chief Operating Officer
• Founder
• Chairman
• Sales Manager
• Marketing Manager
Benefits of Key Person Insurance It ’ s not fun to plan for the worst-case scenario , but it is responsible for businesses to do so . If a key person at your organization were to pass away , a key person protection policy can protect your business from substantial financial damages that are associated with the following :
• Replacing lost profits
• Recruiting and training replacements
• Losing highly profitable contracts
• Securing reputation management resources
• Paying outstanding loans
How Much Does Key Person Insurance Cost ? The cost of your policy will be contingent on many factors that include the type of the policy , amount of the coverage , the key person ’ s age , gender and health profile , and the company ’ s size and industry . health concerns . That said , the price increases as the number of situations that the policy covers are added .
Key Person ’ s Age , Gender and Health Profile Premiums are heavily informed by the age , gender and health profile of the individual identified as the key person on the policy . If the insured person is of an elder age and is experiencing major health concerns , you will likely pay more for the insurance policy than if they were younger with a more low-risk health profile .
Company Size and Industry Larger companies with high revenue numbers are more vulnerable to significant financial losses in the event they lose a hard-to-replace employee . Those businesses will incur higher policy fees because it also leads to higher policy payouts . Also , different risk potential for death and critical illness comes with a company ’ s industry . And , not surprisingly , an increased level of risk leads to increased premiums .
Get In Touch At Doeren Mayhew Insurance Group , our trusted advisors are on hand to deliver the guidance you need to plan for protecting your business when a key person departs . From covering revenue losses and training personnel to investing in reputation management and repaying loans , the benefits of key person protection offer valuable risk management solutions for businesses like yours .
Contact us today to learn more about how our customized insurance solutions can provide financial relief if you lose a critical team member . ■
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Type of Policy and Amount of Coverage If the policy pays out in the case of death , the cost of your key person protection policy will be lower than when coverage is activated for illnesses or disabilities , which include cancer , heart attacks and other major
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