Every business has an employee that acts as the engine that makes the business go. What would happen if that employee were to pass away prematurely, would the business be able to stay afloat?
Businesses of all shapes and sizes face this dilemma, but few are actually protected in the event of a key employee’s death. Small businesses in particular are susceptible to being impacted by the loss of an employee, but again, we’re not talking about just any employee. We’re talking an employee so valuable that the business would face significant financial repercussions in their absence.
So how do you help protect your clients’ business to ensure it can withstand this type of hardship?
Key person life insurance is designed for just this occasion! Key person life insurance helps protect your clients’ business in the event of an unexpected death. Here’s how it works:
- You and your client determine the impact, financially speaking, that would arise from the loss of a key employee.
- Your clients’ company buys, owns, pays the premiums on, and is the beneficiary of a life insurance policy covering the key employee’s life.
- At the death of the key employee, the life insurance policy pays your company an income tax-free benefit.
It’s just that simple. This concept is easy to explain and easy to implement. Utilizing life insurance to help protect your client’s business has a plethora of advantages, a few of which are listed below:
- Life insurance lets you reduce, or even eliminate, some of the risk your business may face following the death of a key employee.
- Proceeds from the policy are available to offset expenses of hiring and training a new employee.
- The plan is completely selective – cover only those key employees that are most important to the continued success of your clients business.
- Life insurance benefits are received income tax-free by the business.
Key person life insurance can be a simple solution to a business owner’s complex problem. By adopting a policy and utilizing key person insurance, you can help your clients mitigate risk by providing financial stability to the company in what can be an extremely chaotic time. Now, when your clients get asked if their business is protected in the event of a key employee’s death, they can say, “of course – I’ve got a policy for that!”