Key Person Insurance can play an important part protecting a businesses interests.
Who is a Key Person?
A key person is someone who fulfills the following important functions in a business.
Management and direction expertise,
- Technical expertise and experience,
- Holds key customer relationships,
- Generates a significant level of sales for the business,
- Holds intellectual property,
- Provides creditworthiness to the business.
A loss of a key person could cause the business to lose sales income, incur increased costs and become unprofitable. Usually, the business owner is a key person to the business.
What is Key Person Insurance?
Key person insurance provides the business with money to operate and continue profitability. It also provides the business owner with money to pay off any business borrowings.
Business borrowings could be a key risk to a business owner. The bank or other external creditor will hold the business owners’ personal home as security for a business loan. If the business becomes unprofitable, the bank could call in the loan.
How does Key Person insurance work?
A business owner can insure for potential loss in business sales or profits including money to payout any business loans.
When a business borrows money from the bank or other lenders often personal assets are security against the loan.
The director who is a key person can secure a key person policy to repay the business loan in the event of premature death, total disablement, or serious illness.
A combination of Life, Total & Permanent Disability and Trauma insurance policies can be arranged to achieve the desired coverage.
To discuss how key person insurance can assist you business click here.