Even in this era of teamwork, it’s only realistic to acknowledge that some people contribute more to a business’s success than others. If one of your employees were to leave your company, are you worried it might not recover from the loss? If so, this employee is considered a “key person,” and there is insurance to deal with his or her loss should it occur.
Who is a key employee?
These policies are usually intended for business owners, but they might also be appropriate for top salespeople or anyone else deemed “key” to the business’s success.
How does this policy work?
In key employee insurance, the company pays premiums for an employee because it would experience a severe setback if something happened to that individual. The benefits would help the company weather the tough times resulting from the employee’s loss until it could find its footing again.
Depending on the type of policy purchased, key person insurance may be considered an employee benefit. It would build cash value during an employee’s time at the company, and the company might agree to give a percentage of that cash value to the employee on retirement-which gives the employee an excellent reason to stay.
In this is a policy the details really matter. You’ll need to decide who you can and can’t do without and what type of policy is best for your business. Your insurance agent will tell you more about how key employee insurance works and advise you on which policy makes sense for you.