Key Person Coverage
Key person insurance covers an employee who is crucial to the success of the business. This insurance strategy helps protect a business from an economic loss when an important employee is not able to function within the business at a normal capacity. For many Small and Medium businesses, the key people are the owners and the insurance planning needs to take into consideration the risks they face.
What Can Lions Financial Do for You?
Lions Financial helps clients find the suitable solution of key person insurance planning. Then we advise our clients on what they can do for each step to get the best results. To best assist, we applied Four-step SIRE process to create value for you.
- Survey: We will begin process with a questionnaire to have a general understanding of your business and identify the unique composition of key employees. We clarify your business objectives and gain understanding of the unique current issues that need to be addressed.
- Insight: To have a deep insight of your specific business, we will incorporate industry research, determine product offerings available from many sources, create an assessment and evaluation about your company’s key person structural plan options.
- Recommendation: Then, we will come up with solutions for a key person insurance program that is tailored to your company. As an independent firm we can present multiple providers to create a plan that helps create value in attracting and retaining talent in your company.
- Execution: We will implement the strategy your company would like to execute on based on the options provided and budget available. We help achieve a better result with our professional experience, integration of technology, understanding of your industry, and staying attuned to the compliance and regulatory requirements.
The Key Items to Consider in Key Person Insurance
- How to define a key person
A key person in the business is someone who contributes significant value currently and is component of current financial success. Key person maybe one of the owners of the business. There is a risk to the business if this person is inactive which can lead to negative implications to the company that are measured by financial loses.
- The importance to have this insurance
Business’s has the risk of suffering from a key employee’s inability to perform at work. It is important to understand that a key person has specific management skills and experience may not replaceable in short period of time. Significant loss can influence the management’s decision making if the company is facing a significant deal. Disruption in the business can cause client delays, partnerships, and credit line valuation. Key person insurance can be a good choice to mitigate financial risks that would be attributed to these losses.
- Benefit of key person insurance
If the key employee is an owner of the business, the policy can help fund a buy-out of his or her business interest if disability or death occurs.
- Coverage Process
- Identify key person
- Give employee notice of intension to buy the insurance
- Acquire the consent of key employee
- Insurance carrier pays the policy proceeds
- Review tax related factors
Contact Lions Financial to find a better strategy and holistic plan for you. Lions Financial helps business executives, together with their tax and legal advisors, to develop the optimal financial solutions for success. Contact us for an initial consultation to help with your current business need.