Why the Key Person Life Insurance Policy Is A-Must Have for Companies
The Key Person Life Insurance, also known as key man insurance is a type of life insurance that is given to companies that have vital employees whose absence from work will drastically affect the daily operations of the company. This occurs when the employee has a particular set of skills that are not readily available or replaced. This means that without their input the company will not achieve its target objectives or profits. So why should companies have key person insurance in place?
Continuance of operations
When a key employee whose special skills are vital in the normal operations of the company decides to quit or fail to come to work, the activities of the business will definitely halt. This is not good for the business, and if it is not solved in the shortest time possible, it will lead to losses for the company. Therefore, to ensure that everything goes on well with or without the key employee, it is a good idea for the company to take the key person life insurance.
Improves chances of getting venture capitalist financing
When you have the key person life insurance in place, it creates a sense of confidence among investors that their investments are secure even if the key employee suddenly resigns, becomes incapacitated or is absent. The investor will be sure that he or she will be able to recoup at least part of the investment in the event of misfortune or something unexpected happening.
This insurance cover can boost the morale of the key employee or employees. When the employee realizes that the company has taken an insurance policy to cover his or her skills, they feel unique and part of the organization. They feel recognized and essential to the organization. The recognition boosts their morale and encourages them to work harder and achieve the company’s objectives.
It is cost-free to the employee
When the key person life insurance policy is taken, the company in question pays the premium, not the employee. The company then will receive the pay-outs in case the employee dies or becomes incapacitated. Therefore, the employee does not incur any expenses as far as the insurance policy is concerned.
If you are a manufacturing firm, a business organization in Tucson that is concerned about its operations in the case a key employee is absent, becomes incapacitated or dies, you should consider taking this vital insurance policy for the sake of your business. It is not only beneficial to them, but it is advantageous to the employee as well.