You might describe the skills and knowledge of the senior staff as priceless, but if anything happened to them, the financial losses for your business could be very real.
Where ordinary life insurance compensates a person’s financial dependents for loss of income, key person life insurance is all about the costs a business faces when the person dies. It’s best suited for staff who are so vital to the company’s operations that it could struggle to survive without them.
The payout from a key person life insurance policy will ideally help the company stay afloat while the other members of your staff come to grips with running the business, or until your business hires a suitable replacement and brings them up to speed.
In the worst-case scenario, the payout could instead be used to wind down operations in a controlled manner rather than face the chaos and damage of a forced liquidation.
In addition to paying out when a key staff member has passed away, some key person policies will also pay out if the person is diagnosed with a terminal illness or suffers a critical illness that means they can no longer work.
Key person life insurance is a great way to protect your business. If you think this might be a good fit for your business, let us know. We can walk you through your options.