Key Person Disability Insurance

Key Person Disability

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Stability in the Event of Key Person Disability

Business owners and key players in a company care deeply about the well-being of employees and the stability of the business. When a critical employee becomes disabled, day-to-day business can become stressful for workers and managers alike.

Key person disability insurance is designed to provide companies with financial stability in a time of stress due to the sudden loss of an important employee. Policies can be taken out for any employee or manager the company deems essential. If a disability arises or an injury occurs, an insured key person can work towards recovery without having to worry about the potentially devastating impact of his or her absence.

Key person disability policies are beneficial because of the flexibility they offer. The money the company receives in the event of disability of a key employee may be used as necessary, whether that is hiring a temporary replacement for the staff member or simply covering for lost revenue as a result of the absence.

 

Who Buys Key Person Coverage?Key-Person

A company may take out key person coverage on anyone whose absence could profoundly impact its operations. Of course, the insured must consent to the coverage before the company may purchase a policy. If an employee falls into any of the descriptions listed below, a company may very well want to seek key person coverage, especially if it is a small business where individuals shoulder many unique responsibilities. Key person coverage is crucial for:

  • Employees who would be extremely difficult, time-consuming or expensive to replace (ex: central decision makers, chief executives, vital sales managers or employees whose ideas have critical commercial impact)
  • Highly skilled employees with unique training
  • Employees with exclusive ties to key clients, like sports stars
  • Employees who are company leaders and have irreplaceable knowledge
  • Small business owners who would face financial hardship in losing a key staff member, employee or client
This article was written by Zywave LP, an entity unrelated to HollandStivers & Associates LLC. The information contained in this article is not intended to be tax, investment, or legal advice, and it may not be relied on for the purpose of avoiding any tax penalties. HollandStivers & Associates LLC does not provide tax or legal advice. You are encouraged to consult with your tax advisor or attorney regarding specific tax issues. ©2012 Zywave LP. All rights reserved.

 

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