Key Person Protection with Life and Disability Income Insurance

Key employee life insurance is usually purchased on one or more key people in a business to protect the business from the economic loss associated with an untimely death.  The company buys the insurance to cover the life of the key person and is also the policy beneficiary. In the event that the key employee dies, the business receives the lump sum policy proceeds that can be used at the company’s discretion to stabilize the company until a replacement employee can be found.

Key Employee Life Insurance Concerns

Once the need for key employee life insurance has been established, there are a few questions that should be answered before you begin to shop for a policy.  The answers to these questions will be helpful in determining the type of insurance needed, the amount of the policy and how long the policy should be maintained.

• Why are you considering key employee life insurance?
• What are the contingencies for the company if a key employee dies?
• Would the business continue operations or liquidate or be sold?
• Can a capable replacement employee be easily located?
• How much will it cost to locate and train a replacement?
• What type of compensation will it take to hire the new employee?
• What percentage of revenue is directly attributable to the key person?
• Would the key person’s death result in the loss of clients?
• Is the company willing to self-insure?
• Where do I locate a competent professional insurance agent that has experience in working with companies such as ours?

The answers to the questions above will provide a good starting point in your efforts to secure the best key employee life insurance policy.  If you have additional questions, please contact Doumar Insurance & Financial Services at 561-575-1200 or email at david@doumarinsurance.com

Key Man Disability Insurance

Key man disability insurance is designed to protect the business in the unfortunate event that a key employee or executive suffers a disabling accident, injury or illness.  It provides peace of mind to companies and business owners alike knowing that the business can continue without major disruption if a disability strikes a top salesperson, executive or key employee.

How Does Key Man Disability Insurance Work?

Key man disability insurance is purchased on one or more key people in a business to protect the business from the economic loss associated with the disability of a key employee.  The company buys the insurance and is also the beneficiary of any proceeds should a disability arise.  If disability occurs, benefits will be paid, based on the terms of the policy, as long as the key employee cannot perform the regular and substantial duties of his regular occupation.  The funds can be used at the company’s discretion to stabilize the company until a replacement employee can be located.

Important Key Person Disability Questions

• Some important questions business owners should ask when considering key person disability insurance:
• What are the contingencies for the company if a key employee is disabled?
• How hard will it be to locate and train a replacement?
• What type of compensation will it take to hire the new employee?
• What percentage of revenue is directly attributable to the key person?
• Would the key person’s disability result in the loss of clients?
• Is the company willing to self-insure?
• Where do I locate a competent professional insurance agent that has experience in working with companies such as ours?

The answers to the questions above will provide a good starting point in your efforts to secure the best key person disability insurance policy.  If you have additional questions, please contact Doumar Insurance & Financial Services at 561-575-1200 or email at david@doumarinsurance.com