Many people understand the importance of life insurance and how it can help to protect a family after the death of a loved one. However, an individual’s death can have an impact far beyond their family members. Key person insurance, which is also called key man insurance, can be used to help protect a business in the event of a key employee or owner’s death.
What is Covered by Key Person Insurance?
Key person insurance is used to help cover the lost profits that a business may experience after the death of the insured key employee or owner. It can also help to cover these aspects if these individuals become disabled and are no longer able to continue working. Key person insurance can also help to offset the costs of hiring and training a replacement. This can be a valuable component in helping a company to survive through the loss of an employee or owner.
What is Key Person Insurance?
Key person insurance is also commonly called key man insurance. A company has the ability to purchase this insurance policy on an owner or critical employees to their business. This type of insurance helps to protect a business and can prevent them from ending after a key individual becomes disabled or passes away.
Circumstances in Which Key Person Insurance Can be Beneficial
It is important to understand the various circumstances in which a business should consider the purchase of key person insurance. If the loss of an employee could potentially end the business or put it into financial difficulty, the company may want to consider purchasing key person insurance. Another scenario in which key person insurance can be beneficial is when a business is a partnership. If each partner wants the ability to be able to buy out the other’s shares in the business when an untimely death occurs.
At David Jarnagin Insurance, we are dedicated to providing the insurance services that are necessary in protecting your business. To learn more about key person insurance and how it can protect your business, contact us at David Jarnagin Insurance in Kaysville today!