The key person is someone who is vital to the company; someone who cannot be easily replaced and whose knowledge is key to the company. By not recognizing the affect the death of this person may have on the organization, a business may be setting itself up for failure. A few simple steps can be taken that will help ensure the business will be prepared for the unexpected.
Key person life insurance can do several things for a company. It can give them the means to establish a business continuation plan. It can provide the economic means to find a replacement and give them the training needed to fulfill the duties of the person that was lost.
In situations where the death of the owner otherwise means the death of the company, key person life insurance can be used to pay existing debt and allow for an orderly transition to take place.
The need for key person life insurance depends on your circumstances; maybe you haven’t thought about the need or even considered it. If your business relies on you or key associates, you need to think about what exactly it is that you need to protect.