Key Person Insurance
Key person insurance is life insurance and/or disability insurance purchased by a business for one or more vital people to protect the company's long term interests. The business pays for the insurance and serves as the beneficiary. If a key person dies or is disabled, the insurance proceeds are payable directly to the company and can be used for any purpose. A key person can be a business owner or an employee.
Who is a Key Person in a Business?
A Key Person is anyone that is vital to an organization's ongoing success. This can be a business owner or an employee. Many smaller companies depend on just a few people for revenue. The loss of one of these people could undermine a company's viability. Examples include an inventor, top salesperson or corporate executive. In a business, Key People have that special quality that helps make the business successful.
Does Your Business Need Key Person Insurance?
If your business would be significantly affected if one or more of your key people dies or is disabled, then yes, your company needs Key Person Insurance. Companies of all sizes buy Key Person Insurance, but it's especially important for smaller businesses that have considerable exposure if one valuable person is lost.
Key Person Insurance is also commonly purchased on business owners to efficiently plan for buisness succession. Key Person life and disability insurance is a perfect tool for buying-out the interest of a deceased or disabled owner's family. In the event of a death or disability, the company can redeem the outstanding shares of the business from his or her estate – effectively paying fair market value to the heirs while at the same time retaining current ownership.
Contact Lucas Insurance Advisory today for more information on Key Person Insurance.