As a small business owner, just managing all the day-to-day operations of your business can be daunting.
Now consider what would happen if you had to do it without one of your key people.
- Would operations continue uninterrupted?
- Would revenues remain consistent?
- Could you easily find a replacement with equal knowledge, experience and aptitude that could pick up right where your key employee left off?
If you answered ‘NO’ to any of these questions, don’t panic just yet. You can rest easy knowing you’re in good company with nearly every other small business in operation today.
But don’t rest too easily… there’s still work to be done. At this point, we’ve only identified the problem.
In our continued quest to do our part in supporting Life Insurance Awareness month, we turn our attention to the significant need small businesses have to protect one of their biggest competitive advantages: their key employees.
For a small business, the loss of a key employee can be devastating.
It could result in the loss of earnings or a specialized skill set. It could create concern among your clients, and jeopardize the continued operation of your business.
So what are small businesses to do?
Key Person Life is a Solution
A Key Person Life Insurance policy can alleviate many of the negative consequences businesses suffer when an individual that’s essential to the success of the business passes away.
The policy can be used to cover the loss of an owner, a partner, or even an employee that would be extremely difficult or even impossible to replace if she were to die.
How’s it work?
From a big picture perspective, Key Person Life Insurance was created to help recover from the loss of a key member of your business.
The insurance mechanism is fairly simple and straightforward:
- The business purchases a life insurance policy on one employee (or even several key individuals within the organization, if needed), with the company being named as the beneficiary and owner of the policy.
- If something tragic were to happen to the employee (or employees) covered by the policy, the benefit would be paid to the business to help you hire and train a new employee so your business can get back on stable ground.
Curious how this actually works in a real-life situation?
Jeff Moses, president of Auto Custom Carpets, was on his way home from a business trip in Ohio when tragedy struck.
The small airplane he was riding in lost control and crashed into a creek near Talladega, Alabama. The plane exploded upon impact, killing everyone on board.
Jeff’s death left a huge void in the company’s leadership team.
Not only was Moses the president and co-owner of Auto Custom Carpets, he was also a charismatic sales leader whose product knowledge and extensive industry experience were integral to the company’s success.
Nearly every successful small business in existence today could be in this exact same situation. We all have key people we depend on, and if something happened to them, our business would suffer significantly.
In the case of Auto Custom Carpets, without Moses leading the way, the company could expect immediate and precipitous drop in sales revenue.
The future of Auto Custom Carpets and its 150 employees hinged on the two remaining partners to quickly find and recruit a qualified replacement before the working capital dried up.
Thankfully, the executive team had had the foresight to purchase a Key Person Life insurance policy for each of the three partners.
The infusion of capital from the Key Person Life policy enabled Auto Custom Carpets to recruit and hire an experienced sales professional away from one of their competitors, and less than 30 days after the tragic crash, the company was back up and running at full speed.
You can watch the entire story here.
The bottom line is: Key Person Insurance should be a vital component of your business plan, both now and for the long-term.
If you’re like most small business owners, you’ve worked too hard not to put a simple Key Person policy in place to protect the future of your business, and the future of the employees who have placed their trust in you.
Finding the best insurance policy for your Key Person Life Insurance needs in Ohio can be confusing, time consuming and difficult.
However, making sure the right insurance protection is in place is absolutely critical to ensuring your business can recover from the loss of a key employee. Without it, the business, and its employees, are one tragedy away from being in serious financial hardship.
And remember, not all policies are created equal.
You probably wouldn’t go to your eye doctor instead of your dentist if you were having a toothache, right? Just because they’re both doctors doesn’t mean they have the same skillset.
Just the same, you need an Insurance Advisor that understands your individual needs, your business and its goals, and how best to protect them.
We can help.
We know the Life Insurance market, we take the time to listen and understand your needs, and we work with multiple insurance companies so we can deliver the insurance solution that’s perfect for you, and your budget.
When you have confidence in your Insurance Advisor, you have greater peace of mind knowing that your business, your employees, and your family will have the financial resources needed, even when disaster strikes.
To get started on your customized solution, contact one of our Licensed Advisors, or Request a Proposal and we’ll get to work right away.