The loss or disability of a key employee can have devastating effects on the service and income of your business. Business Life and Disability insurance, also known as Key Person Insurance, protects your business against the death or disability of key employees. Key Person Insurance is purchased to compensate your business for the financial losses that would arise from the death or extended incapacity of a key employee. Key person insurance does not cover the actual losses incurred by the business, but compensates the business with a fixed monetary sum as specified on the insurance policy.
A business may take out a key person insurance policy on the life or health of any employee whose knowledge, work or overall contribution to the business is considered valuable to the company. By doing this, the employer offsets the costs, possibly hiring temporary help or a permanent successor, and the losses, such as business opportunities while training a possible successor, which might be incurred in the event of the loss of a key employee.
To determine to what extent your business could be impacted by the loss of certain employees and how to insure for that loss, call an Allen Insurance and Financial professional today.