Contribution to earnings.<\/strong> This method attempts to calculate the percentage of contribution that a key person adds to a company\u2019s bottom line profit. This can be a preferred method when the key person is a company\u2019s top sales person who contributes a significant amount of sales volume and profits to a company\u2019s bottom line. Insurance companies will take into account the actual value of the company\u2019s profits directly attributable to the key person and multiply it by the number of years it would require to replace those numbers by hiring and training another replacement employee.<\/p>\n\n\n\nIn using these valuation methods, many insurance experts agree that a business owner should purchase as much key person insurance as they can afford, providing the greatest amount of protection for their company.<\/p>\n\n\n\n
To save on premiums, it is recommended that a company purchase term insurance versus whole or variable life policies which carry higher premiums and pay out greater commissions for insurance agents. Because a person\u2019s employment will be for a specific amount of time, term insurance makes the most sense.<\/p>\n\n\n\n
It\u2019s also important to get quotes from several sources, as costs can vary from company to company. And it\u2019s also wise to get quotes on a variety of amounts ranging from $250,000 to $1 million or more. The bottom line is to remember that as a business owner, the primary consideration is to purchase the amount that will protect the short-term cash needs of a business until the key person can be replaced, restoring financial health to the company.<\/p>\n\n\n\n
Key man insurance as part of a business succession plan<\/h2>\n\n\n\n In some instances, a business may not be able to recover from the loss of a key executive. That key executive may be the owner and the face of the company, or their contributions will never be able to be fully replaced under any circumstances.<\/p>\n\n\n\n
When this is the case, key man insurance can be an effective component of a broader business succession plan. Whether or not key person insurance is purchased, all companies of any size should have a business succession plan in place no matter what. Business succession planning ensures the ongoing health of a company and addresses a variety of contingencies that can otherwise threaten the overall health of the business.<\/p>\n\n\n\n
However, with prudent advance planning, key person insurance can be an important element of a succession plan that can provide much need bridge capital and flexibility until the succession plan can be put into action.<\/p>\n\n\n\n
Unfortunately, statistics show that only about one-quarter of all small businesses have a succession plan in place, often putting extreme stress on the survival of many businesses in times of transition.<\/p>\n\n\n\n
What other kinds of business insurance do you need?<\/h2>\n\n\n\n Key man life insurance is an important part of the overall long-term protection of your business, but there are also many other kinds of insurance you should consider as well. In fact, the right kinds of insurance should be a primary part of your business operations to safeguard everything you have work for, while also protecting your employees, your family, and your financial well-being.<\/p>\n\n\n\n
There are several other aspects of your business you should consider insuring. Each will have it\u2019s own unique set of factors that will determine how much coverage you need. Some of the most common types of insurances include:<\/p>\n\n\n\n
Liability<\/strong> \u2013 There are two types of liability insurance you should consider. General liability insurance protects your business in instances where a customer is injured on your property. It will also pay for your legal defense in cases where you are sued due to claims that your product or your service caused a person harm in any way. Professional liability insurance protects you against claims rising against you by others who claim your service caused them financial loss.<\/p>\n\n\n\nProperty<\/strong> \u2013 Protects the physical assets of your business, including buildings, inventory, equipment and other hard assets.<\/p>\n\n\n\nWorkers\u2019 compensation<\/strong> \u2013 If you have employees you will need to have workers\u2019 compensation insurance to cover medical bills arising from any illnesses or injuries that took place as a result of work activities.<\/p>\n\n\n\nBusiness interruption<\/strong> \u2013 If your business is not able to operate due to a property loss, this type of insurance payout will cover lost income during the period in question.<\/p>\n\n\n\nHealth insurance<\/strong> \u2013 With the implementation of the Affordable Care Act, it is critical that you know what your responsibilities are as an employer and how they relate to you and your employees.<\/p>\n\n\n\nCommercial auto<\/strong> \u2013 If you or your employees drive vehicles that are owned by your company, or that are personal vehicles that are driven during the course of business, you need to have a commercial auto policy in place to protect you from potentially devastating losses that could be the result of an auto accident.<\/p>\n\n\n\nKey Person Insurance Quote<\/h2>\n\n\n\n Because there are so many variables when it comes to protecting the long-term financial health of any business, it makes sense to work with insurance professionals who can design the most cost-efficient and streamlined coverages when designing key employee life insurance policies.<\/p>\n\n\n\n
For quotes on key person life insurance, please call our team at 719-451-7552.<\/p>\n","protected":false},"excerpt":{"rendered":"
Key Person Life Insurance Anyone can spend their whole life building the large or small business of their dreams. It\u2019s a rewarding experience like few others, but it\u2019s also one that can be irreparably damaged with one bad stroke of luck, one serious incident, or the loss of one key employee. Savvy business owners know …<\/p>\n","protected":false},"author":2,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"_breakdance_hide_in_design_set":false,"_breakdance_tags":"","footnotes":""},"yoast_head":"\n
Key Person Life Insurance - Bank Owned Life Insurance<\/title>\n \n \n \n \n \n \n \n \n \n \n \n\t \n