When you own a business there is going to be certain types of insurance policies you should or must have. Naturally, some will be optional while others will be mandatory in nature. However, while the one that is the subject of this article is not necessarily required, it is one that each and every business should definitely have, and that is key man life insurance.
Purpose Of Key Man Life Insurance
So, what is key man life insurance, you ask? Well, basically it is a type of insurance policy which covers (insures) the key man (or woman) in a particular business. These are generally someone who is considered to be a crucial element in the day-to-day doings of the business. They are usually the owner or one of the partners in the business. However, sometimes they are people considered to be employees, but who nonetheless are very important to the company.
In other words, the person on the key man life insurance policy is usually regarded as irreplaceable. What the key man life insurance policy in essence does is have the company as the beneficiary should the person named on the policy happen to die. Any benefits payable by the policy will go to the business.
When To Get Key Man Insurance
As mentioned above, all companies should have one of these policies, but those businesses who employ certain people who are crucial to the continued success of the company should definitely have a key man life insurance policy in place, and as soon as possible. Believe this, there are many companies that cannot withstand or survive the loss of certain key players in their organization.
Key man life insurance helps by giving the company money to perhaps stay afloat while they seek a replacement for the person who was lost. Having this kind of insurance in place is so important that it has often meant the difference between a business withstanding such a devastating loss and having to close their doors.
Types Of Policies
Key man life insurance policies generally come in two types. One is called Permanent Life and the other Term Life. The permanent life plan will cost more, however it also has a cash value. With the term life plan, the insurance is provided without any increase in money. It is the more affordable of the two.
Regardless of which type of key man life insurance they decide upon, and how it is structured, it is considered an absolute must-have for pretty much all businesses. If they don’t currently have it, we highly suggest they get it as soon as possible.