If you own a small business, there is a lot riding on you. And, if the business has a few key employees, they may be equally irreplaceable. Every one of you has prime value to operations, and losing one highly valued individual may cause a major setback. That’s why it’s part of a smart business strategy to make an investment in life insurance. Losses from the death of a key employee are insurable.
Key employee life insurance pays a death benefit to the company when a key employee dies. Such a policy is typically owned by the company, which pays the premium and is named as the beneficiary. Having this insurance protection allows the business to regroup after a loss. According to the National Association of Insurance Commissioners, only 22 percent of small businesses have key person life insurance.
There are several types of key person policies — and each is surprisingly affordable. Cost depends upon the age and health of the employee, of course. For example, for as little as $500 a year (or less), you can get $1 million in coverage for key employees in their early 30s whose loss to the business would be catastrophic both personally and financially.
Live long and prosper is a well-known Vulcan proverb. Although the Vulcans are fictional, the fact is that living long and prospering are easy to wish for and only slightly more difficult to do.Â Wishing doesn’t make it so; planning does.