Do you really need that Key Man Life Insurance policy?

Key Man Life Insurance will supply your business with cash when you need it the most? A key man life insurance is exactly what the title says it is, it protects the life or lives of key employees that work for your organization. A Key man also could mean the business owner as well as a valued employee.

This type of policy helps protect the companies owner and the other employees in case of the death of the highly valued employee or owner. Most business owners that are successful have an understanding of planning properly for unforseen circumstances that could affect profitability.

The business buys a term life insurance policy on the life of the key employee or possibly a cash value policy. premiums will come from the business and they will be the beneficiary of the death proceeds. Upon the death of the covered employee the company will receive the death benefit proceeds from the policy. The death benefit is usually used to pay bills, search for a new highly qualified employee, help supply needed cash or as a benefit for the family of your key employee.

How do you know if you need this type of policy or plan to help protect your business?

By answering a few simple questions you should be able to figure out if key man coverage would be a good choice for your business.

• How would your company be affected if a key person died suddenly or unexpectedly?
• How hard or difficult would it be to replace the key people in your company or organization?
• How would your clients react to the death of the key employee, what if you lost your valued employee to your competition. would the customers that your key person handles follow him or her?

If you answered yes to the above you probably need to seriously consider purchasing a key man life policy on one of your key employees.

How does Key Person Insurance help you or the company when the policy is needed? First it can help with interrupted or lost cash flow, loss of clients to a competitor, negative impact on your credit and last but not least provides capital to attract and hire a qualified replacement.

What are the advantages of a Key Man Life Insurance policy? Business gets to select which employees are included in the plan. Life insurance proceeds are distributed income tax free to the business (typically). Creditors and clients can relax that the continuity of the business is intact. Key Man programs are easy to set up with very little reporting requirements with the IRS.