When Is Key Man Insurance Needed

When Do I Need Key Man Insurance?

Key man insurance pays a business in the event of death or disability to any number of its most essential workers. There are several reasons why key man insurance should be obtained by a company. Key man insurance is often much cheaper than life insurance, but it’s still wise to get a free term life insurance quote for comparison.

If Employees Have Advanced Education and Professional Skills

A free term life insurance quote can be secured on a professional with an advanced education who works in a highly specialized field such as a medical and law practice. These individuals are indispensable to the continued success and growth of their respective practices. It is often the case that key man insurance is more cost effective to replace the income producing services of these professionals in the event of their death or disablement.

If They Are the Principle Spokesperson of A Company

When planning key man insurance for the main spokesperson of a product or company who generates the bulk of the annual revenue, a life insurance quotation may also be helpful for a comparison of costs and benefits. A life insurance policy will generally cost more than a key man insurance policy for a primary spokesperson. Key man insurance is therefore essential in the case of the principle of the compnay, however, always compare your options using a free life insurance quotation available online.

If A Business Needs to Buy Out Key Heirs

Key man coverage should be purchased if one of the primary individuals ever dies and the company wants to buy out his spouse and children.

To Obtain Essential, Additional Lender Financing

Most financial institutions will require mandatory key man coverage on the most important individuals in a company before they offer to extend supplementary financing to that company. The coverage protects the lender in case the key men die or get disabled and can’t contribute any longer to the company’s profitability and growth. A free term life insurance quote can help business owners feel more justified in obtaining key man insurance.

If Key Employees Are Young

Younger employees are much more likely to be disabled than to die. Their inability to contribute to the business when they’re incapacitated can mean a devastating loss of productivity and profitability to the company, so key man insurance should definitely be taken out here.