The Strategy You Need to Protect Your Business and Dream.
Proper planning can help sustain businesses in the event of the loss of key personnel, who play an integral part in the company's success.
Thankfully, there are two insurance policies designed to protect your company from the loss of an impact player due to death, disability or other trauma: Key Person Insurance and Buy-Sell Agreements. Think of your chief officers, your managing partner, or even your top sales representatives. Can your business handle the possible consequences of such a large loss?
1: Key Person Insurance, also referred to as Key Man Insurance, is one policy to help lessen the blow of an individual's loss.
It is a life insurance policy that covers your most important team members. In most businesses, this means directors, executives and other key individuals whose loss can be financially devastating to the business.
A Key Person policy allows you to fill the void left behind in the absence of that individual. For instance, the death of your Chief Technology Officer would force you to hire someone qualified to take this person's role. You might even be forced to hire multiple people to compensate for that key person's loss.
Not only you should have a Key Person policy, it has to be properly structured in order to avoid some major tax implications. Also coverage must be adequate not only for today but also for the future as well. Consult with the right person when you wanted to plan for these kinds of structure for your business.
2: Buy-Sell Agreement, the second policy, is meant to help ensure future stability of the business. The two "contingency plans" are unique to each company's need. Some need key man, others need buy-sell. Some need both.
Buy-Sell Agreements address ownership in the event one of multiple owners passes away.
In many circumstances, leadership is passed along through the departed's heirs, who may not have the skill set or even the desire to work in the deceased's or disabled person’s place. Buy-Sell Agreements lay out the terms for sale of a deceased partner's shares of a company in the event of their death or disability.
We not only help evaluate your structure but also can provide proper funding arrangement via insurance or other methods to fulfill the requirements of your Buy-sell agreement.