Starting a business can be exciting and all-encompassing. There are hundreds of decisions made every day. From hiring and training staff and getting the products or services ready for sale to making sales and marketing, a lot is going on. Everything seems time-sensitive. Although it may not feel as urgent as other priorities, this is an ideal time to take care of key employee life insurance.
During the start-up phase, the owner and co-founders learn a lot about business and their industry. This insight and the relationships that are forged forms the foundation of the company and shapes how it grows. If this knowledge is lost due to sudden or unexpected death of a senior employee, the business may stumble. The purpose of a key man policy is to help the company survive this loss and regroup.
How it Works
The organization purchases a life insurance policy on the key employee and pays the monthly premiums. In the event of the insureds death, the proceeds of the policy can be used for expenses, pay off debts, distribute money to investors and generally buys time to make decisions about the company’s future.
Entrepreneurs are typically passionate about their company and work tirelessly for it to succeed. Having key employee life insurance can help the company continue in the event of the catastrophic loss of its founder and leave a lasting legacy.