Who in your business is your right-hand person, the key person helping to run your business? Someone that if they were to pass away unexpectedly, you couldn’t easily replace. Most companies have a key person, but don’t think about life insurance for that person. Life insurance would provide a death benefit to the business, allowing time to find a person to fill the key person’s role. A key-person life insurance policy is owned by and paid for by the business. Key person life insurance is often recommended for business partners and family businesses.
Key Person Life Insurance Example
As an example, Gulf Construction company was started by Bill about 10 years ago. Bill grew the company and hired Jim to be the superintendent for all the construction projects, while Bill was the guy who went out and prospected and sold new jobs. Bill needed Jim to make sure all the jobs were going smoothly and on time. Jim did a great job managing the subcontractors and balancing everyone’s coordination and everything on the job site. Bill knew it would be hard to replace Jim if something ever happened to him, so Gulf Construction company took out a $100,000 life insurance policy on Jim. The death benefit would give Bill funds to find a replacement for Jim. Jim was a key person in operating and running the business, and Bill knew that it would be hard to replace Jim, should anything happen to him. The company would have to recruit, which is expensive, and probably offer a starting bonus, possibly moving expenses, and a competitive salary. The key person’s life insurance policy would make this possible if anything were to happen to Bill’s right-hand guy.
Key Person Life Insurance an Asset to Your Business
Key person life insurance is owned and paid for by the business. The death benefits are tax-free. Key person life insurance is considered an asset that enhances your business’ creditworthiness for commercial borrowing. The policy should build cash value accessible to your business by borrowing from the policy if needed. Contact Darr Schackow Insurance Agency for a free quote today