A Key Man or Key Person is an asset to your business. If loss of an asset would impact profit then you have a decision to make. Do I cover the potential loss myself or pass of the risk to an insurance company. It is as simple and as complicated as that.
If you have further questions, or feel that I could be of assistance, please do not hesitate to contact me.
If you would like to work with a local life insurance broker, you could start with a Google search. For example, if you search for: life insurance broker Halifax or life insurance agent Halifax, my name, along with several others, will come up. You can use the same method to find a life insurance broker in your community.
Co-Founder, TermInsuranceBrokers.com, Goldenzweig Financial Group, Las Vegas, Nevada
Most companies have at least one person (e.g. the owner of the company) who's loss can have a substantial impact on the business' revenue. Upon this "key-person's" death, someone else must be hired to carry on the same tasks performed earlier. Many company owners therefore insist on buying life insurance coverage to minimize the risk, and many lenders require that the business carry life insurance on the key person to protect their loans and investments in the company.
The business would generally own the policy, pay the premiums, and be the beneficiary.
Key person policies are often used to support a buy-sell agreement between business partners with the proceeds structured to purchase the deceased partner's shares or interests in the company - the agreement would typically mandate that the deceased partner's estate sell it's stock to the remaining partners/shareholders and that the partners/shareholders purchase the interest for a specified price (the price should help establish the value of the business for estate planning purposes).
The reason businesses buy key man life insurance is to help the business survive when a key principal or employee dies. Even if the business must be closed due to the death of that employee, the death benefit paid out by a key man life insurance policy can help pay the business close in an orderly fashion, rather than file bankruptcy.
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If you have further questions, or feel that I could be of assistance, please do not hesitate to contact me.
If you would like to work with a local life insurance broker, you could start with a Google search. For example, if you search for: life insurance broker Halifax or life insurance agent Halifax, my name, along with several others, will come up. You can use the same method to find a life insurance broker in your community.
The business would generally own the policy, pay the premiums, and be the beneficiary.
Key person policies are often used to support a buy-sell agreement between business partners with the proceeds structured to purchase the deceased partner's shares or interests in the company - the agreement would typically mandate that the deceased partner's estate sell it's stock to the remaining partners/shareholders and that the partners/shareholders purchase the interest for a specified price (the price should help establish the value of the business for estate planning purposes).