Executives

Keyman Disability Insurance

How much are key executives worth to a business?

If someone buys equipment, they insure it.  Yet the success of a business depends more on its people than on its equipment. If a key employee is disabled, a business can suffer extreme financial loss.

Businesses can guard against the loss of an executive due to a disability by purchasing keyman disability insurance, that is owned by the business, rather than the employee.

Key employee disability insurance protects a business from the disability of a key member. In any business there are a handful of owner/partners without whom the business would fail. In the case of many businesses, the entire business consists of one person. Key employee disability insurance protects the business, and the stakeholders of the business, from the loss of these key players.

Key person disability insurance is simply a disability insurance policy where the beneficiary of the policy is the business, not the employee. It is a business expense for the business and fully tax deductible.

How Much Keyman Disability Insurance Does The business Need?

As with any insurance decision, the amount of keyman disability insurance the business needs will vary based on the specific situation of the business.

 The Business should ask the following questions:

• If it  had to hire someone to perform the services of the partner, what would you have to pay?
   
• How long would it reasonably take for the replacement employee to get fully up to speed?
   
• What would the "stock effect cost"  to the business?
   
• How much can the business afford to spend on key man life insurance annually?