Your business is a pillar of your community, and the name on the door is one that people recognize. Your business partner is a visible part of the brand you’ve spent years building, a cobranded asset that your clients and vendors have learned to trust.
Think about what would happen if your partner suddenly died. Clients could start to pull their accounts, wondering where the business is headed. They might see the death of your partner as a dealbreaker. Meanwhile, operations and payroll continue. You’re left searching for a replacement, trying to provide reassurance and struggling with the financial and emotional fallout alone.
Key person life insurance helps when your business needs extra funding to stay the course after an essential person dies. We can help you with a plan to minimize financial liability and provide relief when your business needs it the most.
Life insurance for your business
Much like personal life insurance, key person life insurance helps cover the financial gap when a death strains funds. A policy can help:
- Cover operational expenses during the transition
- Fund a buy-sell agreement that requires a buyout of ownership shares
- Secure bank or other investor loans requiring collateral or guarantees
- Resolve potential insolvency issues
- Provide cash for employee severance pay and shutdown expenses if the business can’t continue
- Settle the business estate and provide replacement income to the remaining family members
Who is a “key person”?
There aren’t specific requirements defining a key person, but you should consider key person insurance for any partner or employee who significantly impacts your business income, such as:
- Owners or partners
- Executives or C-suite officers
- Top salespeople
- Product developers
- Creatives
- High-profile employees or influencers
- Entrepreneurs
- Sole proprietors
You can structure key person life policies in several ways:
- Each individual buys and pays for a policy on the remaining key people. (The individual is the beneficiary.)
- The business entity buys and pays for all policies on key people. (The business is the beneficiary.)
- One policy insures all named key people, but with a “first-to-die” provision. (Premiums are usually lower because only one life is covered.)
- You buy a term, whole life or universal life insurance policy. (Some policies even build cash value over time.)
We can help you navigate the options available so you can decide which one works best for you.
We’re here to answer your questions
Any life insurance purchase requires an in-depth, honest conversation. But it’s a necessary part of any risk management strategy. We’re here to talk you through your options. Give us a buzz. We’ll set up a time to go over the details with you.
