When a company loses a key employee unexpectedly, several things can happen. First, the business becomes disrupted as the owners decide how the business plan has changed due to the loss. This usually results in a drop in business as the focus is shifted away from generating revenue. Clients may take their business elsewhere, and creditors may become concerned with the ability of the company to make payments. Finally, the company has to decide how to replace the skills that were lost. As you can see, the loss of such a vital employee would have devastating effects on the short-term and long-term bottom line of a business.
Where an employee is key to the success of a business, and his loss would be crippling to the company financially, life and/or disability insurance can be placed on his life. The insurance proceeds are corporate-owned, and can be used for various purposes, including to:
- Recruit, hire and train his replacement
- Provide immediate capital while the business recovers from his loss
- Use as a reserve against a drop in revenue that may occur as the company goes through a transition
- Pay off debts and ease the fears of creditors
Having key person insurance in place can help ensure that your company runs as smoothly as possible at a critical time.
To see how we can help you protect your business with key person insurance, head on to our contact page and send us an email.
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