When running a business, you undeniably have a lot to think about, and insurance is certainly one of those things. I know that you might be focused more on developing certain marketing strategies, for example, but this does not mean that you should just take insurance for granted and postpone getting the policies you need. I am afraid that, if you postpone doing this, you might find yourself in quite a tricky situation which will take a financial toll on your entire business.
I am sure, however, that you are perfectly aware of the importance of insurance and that you are thinking of getting various different types in order to keep your business protected. Have you thought about getting keyperson coverage, though? In case you aren’t exactly sure what this is and how it works, I suggest you learn more about it, because you might just realize that it is something you absolutely need.
There is no doubt in my mind that you do need this type of coverage, especially if you are working in an industry where finding great talents might be a bit tricky or even next to impossible. After all, there is at least one employee that is invaluable to you and that you wouldn’t like to lose and while you can influence their idea of being loyal to your company and being happy with their general working conditions, you certainly cannot influence their health and their lives in general. This means that you would find yourself in a pickle should anything happen to that person.
Most likely, though, you’ll have more than one person that’s invaluable to you. This, of course, depends on the size of your business and, once again, on the industry you are actually in. If you are still not sure, though, what this insurance is and why you might need it, here’s what I suggest. Continue reading, because I’ll answer those questions for you and thus help you get a better idea about why your business might need this coverage and why you should get it.
What Is It?
We are, unsurprisingly, starting with the very basics. After all, there is absolutely no point in talking about the reasons why this insurance is necessary if you don’t even know what it is. While the name itself, i.e. “keyperson coverage” might hint at the meaning of it all, I believe that making everything perfectly clear is a much better option than leaving things for people to assume on their own. So, let’s make things clear.
Basically, keyperson insurance is life insurance for the key players in your business. First off, the owner is a key player and then there might be a few more of those, including your department heads, certain directors and managers. To put it simply, these are the people that are vital to your business and whose absence would definitely take a huge toll on the functioning of your entire company.
Replacing them is difficult, but if you find yourself needing to do that in case of unexpected death of one of the key employees, then you will definitely have to spend a lot of time searching for a great replacement, meaning that you could use some financial support to get you through the searching period. After all, you don’t want to hire unqualified individuals simply because you are in a hurry.
Why Is It A Good Idea?
Now that you know precisely what keyperson coverage is, you have probably started thinking about the reasons why getting it is a good idea. I believe that the mere definition of the insurance tells you a lot about why this is a necessity rather than an option, but if you are still not sure if this would be the right move for you or not, let me get you familiar with some of the reasons why it would certainly be the perfect thing for your business. Hopefully, those reasons will shed some light one everything.
First things first, your entire business might turn out to be in jeopardy if you find yourself loosing particular people. If you get some more information on keyperson cover, you will realize that these policies could actually help your business stay afloat in the event of a loss and make up for the money that you would most definitely lose if you had no insurance in place.
No matter how sorry you might be for the loss of a person, the harsh truth is that business needs to keep running as usual and this type of coverage can help you achieve that.
That’s not all, though.
Let us say that you are running a family business and that you are the head. What can your family expect and what should they do if something were to happen to you? There is the question of taking the business over that needs to be answered, and then there is also the idea that your family might simply want to sell the company and move towards a different direction.
Those are all some valid options and having keyperson coverage will help them get through the deciding period more easily, as well as resolve and buying and selling issues that might actually occur.
Another reason why you might want to get this type of insurance is because you might find yourself needing to use certain financing options in the future and a lot of banks won’t even think about extending you any good offers if you don’t have keyperson coverage in place.
I know that this might sound a bit harsh, but it’s just a requirement that needs to be met, as banks and financial institutions in general want to play it safe when giving out loans. While this requirement might be there in order to reduce risks for the lending institution, the simple truth is that it will also reduce risks for you as the borrower, which is a pretty big deal.
Should You Get It?
Now that you are aware of some of the reasons why getting keyperson coverage is important, you will want to get a clear and straightforward answer to the question of whether you should get it. Well, this is a question that only you can answer, as nobody can speak on your behalf.
Still, I think that you can greatly benefit from protecting yourself in this particular way, especially if you are worried that you might lose some of your most valuable employees unexpectedly. Plus, as we have made it clear already, this type of protection might even be a requirement in certain instances. In any case, the decision is yours to make.