Saskatoon Directory in our Trusted Saskatoon Financial Services category.
tip on Key Person Insurance - Is Your Business Protected?
As a business owner or executive you understand how critical certain employees are to your organization, but have you considered what would happen if one of your star performers became disabled or suffered death? There are many situations where insurance can provide protection for your company.
What is key person insurance and why it’s critical for business continuance?
Key person insurance provides working capital to meet immediate cash needs for a business in the event of the death of a business owner or a key executive. Personnel who hold key positions in the firm are easy to identify: their knowledge, experience, judgment, reputation and skills as well as the external relationships they have built make them invaluable to the future success of the business. This key person may have a particular skill set which is difficult, if not impossible, to replicate in the short term. The death of such an individual results in the loss of a key member of the management team and can have a severe financial impact.
Key person insurance can provide the following benefits:
· Cash flow to hire the best replacement;
· Income to withstand delays, disruption and reduced efficiency;
· Working capital to overcome credit issues and competitor attacks;
· Resources to prevent customers losing confidence in the company; and
· Capital protection for the heirs of the shareholder or business owner who are relying on the sale of an ongoing enterprise to fund their future.
Key person insurance provides many potential benefits to the business, the business owner and the owner’s family. It helps to address the immediate financial impact of the loss of a key contributor to the firm, and provides a financial bridge during a period of disruption and change of ownership for the company’s shareholders. The value of these benefits to the business in the event of the death of the owner-manager or other key executive will usually far exceed the cost of the life insurance.