Key Person Protection

In this post, we’ll be discussing Key Person Protection. Think about this: What would YOU do if you lost a Key Person in your company, someone you rely on heavily for your business?

Corporate Owned Life Insurance can save the day. In our previous blog post, we discussed how it can be structured to become a tax free cash injection into your business.

Typically, the amount that key person contributes to your bottom line, or gross income, is their VALUE. The insurance payout should be a multiple of that person’s value to your company. The employee you just lost likely had a salary; therefore you would want to protect at least 1 to 2 times their number.

Often, most employees don’t know everything about your company when they first start, and they will experience a learning curve for the first few months of employment. If it takes 6 months for someone to be fully up to speed, for example, there is probably lost revenue in that time frame that you have to protect.

What if you don’t hire the right person the first time? You can enter the recruitment industry to help find your ideal candidate. But services like this do not come cheap, and there definitely is truth in the saying “You get what you pay for”. You don’t want to be in a position where your company doesn’t have the funds to pay for the head hunter, because business has slowed due to the loss of your Key Person.

It’s a vicious cycle, but here’s how we can help: We can build a bit of a buffer on the number as your business expands and grows year after year. We will never be able to replace that one person, but we can make the loss a transition that will put you and your company in a position to not be hurt financially.

Stick around for our blog post next week, where we’ll continue to discuss the benefits of Corporate Owned Life Insurance.

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