In any business, there is a person or team of people that would be nearly impossible to replace if tragedy struck. If that person passed away unexpectedly, the business would be at risk of failing. Key person insurance protects your company in the face of such a loss.
Lake Region Insurance Agency has a team of premier independent agents to serve Greater Minnesota. We have offices and agents in Cokato, New London, and Willmar, MN. It’s an honor to help our neighbors and fellow business owners.
A key person or employee policy is a life insurance plan with the business as the beneficiary. The company pays the premiums for this type of plan. The policy covers the critical person to safeguard the company from financial fall-out in the event of their death.
Typically, the key person is the owner of the company, but it could also be a director or employee whose role is vital. In many small businesses, in particular, the owner is responsible for multiple critical pieces to keep things afloat.
They may be in charge of banking, payroll, ordering, and paying all the bills. If something happens to that person, the company is in danger of going under rapidly and declaring bankruptcy.
The funds from a key person or employee policy can assist in several ways:
Essentially, a key person policy offers time and resources, while the company decides its next step. If the company must close down after such a loss, it can do that without having to undergo legal bankruptcy.
As an owner, securing key person insurance on yourself can also help you:
A key employee is anyone who the company “couldn’t survive without.” In other words, if this person or people stopped coming in, the business would fail.
Typically, owners fall under this category, especially in most small businesses. If the owner handles many or most essential business operations, they fall under the key person category. Other critical people could include team leaders, controllers, CFO’s, or executives.
Policy limits typically range from $100,000 to $1 million or more. You’ll need to evaluate your potential financial exposure if your key person passes away.
The Lake Region independent agents can help you determine your risk and give guidance on the right coverage for your organization. We do not work for one specific insurance company, so we can search for the perfect policy to match your needs.
Call us or visit our website to learn more and set up a free consultation. We have over 50 years of excellent insurance service in our hometown communities. And we’re proud to work with our neighbors to provide the protection and peace of mind they deserve.