Did you know that insurance premiums totaled over $1 trillion in 2020? This makes it one of the most valuable industries in the country. Interestingly, many people are unaware of the benefits that key man insurance coverage can provide for their organization.
The good news is that understanding a key man insurance policy is easier than you think. Let’s take a look at everything you need to know.
So, What Is Key Man Insurance?
Key man insurance is a type of policy that provides financial protection for a business in the event that the key person or key people within the company die or are no longer able to work. This can be especially important for businesses that are closely tied to the key person’s success.
For example, if the key person is the founder of the company, the business may not be able to survive without them.
Who Needs Key Man Insurance?
Any business that relies on one or more key people for its success should consider key man insurance. This includes businesses with a single key person, as well as businesses with multiple key people.
It’s important to note that key man insurance is not just for businesses that are in danger of failing without the key person. It can also be used to provide financial security for the key person’s family in the event of his or her death.
Not quite sure if it’s right for you? You can check out this page to help you evaluate key man insurance.
How Much Does Key Man Insurance Cost?
The cost of key man insurance will vary depending on several factors, including the age and health of the key person, the company’s size, and the amount of coverage needed. However, this type of insurance is typically much less expensive than other types of business insurance policies.
Keep in mind that the industry you operate within will play a role in determining the price of your coverage. For example, key man insurance for someone who works in construction will be higher than for someone who works in the tech field.
When Should You Buy Key Man Insurance?
The best time to buy key man insurance is when the key person is healthy, and there is no indication that he or she is about to die or retire. This will ensure that you get the best rates and that the policy is in effect when you need it most. Otherwise, you may need to pay more for your policy since your insurance provider may feel that the covered individual is a liability.
This Type of Insurance Coverage Is Not Something You Should Overlook
When handled correctly, it can provide you with much-needed protection and help prevent issues from arising in the future. Keep this information about key man insurance in mind so you can make the decision best for you.
Looking for other useful info about running a successful company? Our blog has plenty of high-quality articles that you can check out.