By Kristy Parker, CISR
Georgetown Insurance Service, Inc.
Silver Spring, MD
Every business has that one employee who they just can’t afford to lose. You know the one. That employee whose face comes to mind instantly. In fact, I bet you are picturing them right now.
It could be the employee who brings in the most business or the one who knows how to work the specialized machinery. Or maybe it’s the person who keeps the office running operationally and knows the ins and outs of the business unlike anyone else in the company. This employee is key. Your business NEEDS them to keep things afloat and progressing.
However, what happens if this key employee passes away suddenly or has a devastating accident? How will your business recover? How will you bring in new business or train someone to fill those impossibly big shoes? How will you pay your bills? The questions are endless.
While there is no insurance option that could ever replace the loss of a valued employee, there is a solution that could help safeguard your company financially. That solution is key man insurance. Key man insurance is available in both life insurance and disability insurance formats to help protect against accidents or death.
Here are three reasons you should consider investing in key man insurance.
- You could take a significant income hit. For a company that depends heavily on one or two sales producers, it would be a wise investment to purchase a key man policy for your top grossing employees. As we all know, good sales producers are not easy to find and losing your top producer could hurt your bottom line and send your company into a financial crisis. By having a key man policy, your company would have the financial cushion to bounce back from such a loss.
- It’s a smart investment for companies of all sizes. Key man insurance makes sense for any company that has financially valuable employees…SPOILER ALERT…that’s everyone. Large companies often have key executives or decision makers that are vital to the company’s success. In the same way, smaller businesses and start-ups could potentially be hit even harder by the loss of an employee since they often don’t have a stockpile of fluid capital to soften the blow.
- It can be used as a benefit to retain key employees. We all know that employees can quit or resign at any time, which is why we often “sweeten” the deal for our key employees. One perk that key man insurance allows you to offer is a split payoff, in the case of death, for the employee’s family.
When considering whether key man insurance is the right solution for your business (HINT: It is), I would recommend asking yourself the following two questions:
- Do you have an employee or employees who would cause a financial loss for the business if they were to die?
- Is this a cost that my business could tolerate or easily make up?
If the answer to question number two is no, then the time to consider key man insurance is now. Unfortunately, life is unpredictable, but your insurance doesn’t have to be.
Reach out to any of our agents for more information.