Most companies have key employees to which the success and profitability of the firm are directly related. Most businesses would not be prosperous without the knowledge, experience and skill of such Key Persons.
While it is routine for companies to insure tangible assets such as office equipment and real estate, most overlook the obvious need for protecting against the loss of a Key Person as the result of a disability.
The loss of a Key Person can be devastating, not only affecting the profitability of the firm, but also productivity, customer relations, employee morale and in general the overall effectiveness of the firm. Protection against the loss of cash flow and the usual increase in costs when a key employee becomes disabled can be obtained the Key Person Disability Insurance.
Key person disability insurance benefits may be used at the discretion of the employer. The most common uses for benefits are to cover expenses of a recruiter to find a replacement, to reimburse losses due to reduced productivity, to provide travel expenses for a new account manager to meet with clients and to supplement overtime payments for the existing staff to cover the additional workload.
Who Is Considered A Key Person
Key Persons exist in all companies, and are not defined by occupation, salary, or title alone. Key persons may be employees or employers. Their performance and value dictate the success or failures of companies. Typically, we consider Key Employees to be the top sales people who hold large accounts or executives that maintain important business relationships. While this may statistically be the most common use for Key Person Disability Insurance, its not the rule. A Key Employee is anyone who provides significant value to a company and whose long-term absence would cause a significant loss to that firm.
For anymore information or if you have any questions please contact me at (949)275-6233 or visit our website at www.levineadvisors.com
