The staff of a business can be immensely valuable. This is particularly true of businesses that are reliant on the technical expertise or experience of a particular employee. For these enterprises, the costs of investing in a key person life insurance policy can be an investment for mitigating the impacts if these employees fall victim to an unfortunate accident.
How Does A Key Person Life Insurance Policy Protect A Business?
In the event that an accident disables or kills a key employee of the business, it can suffer substantial disruptions in its operations. For businesses that have lost personnel with skills that are difficult to replace, it can be some time before the enterprise fully recovers from this loss. To help offset the revenue that may be lost as a result of these disruptions, these policies will provide compensation that will help the business to weather these losses while the key employee is replaced.
What Is Involved In Assessing Whether A Key Person Life Insurance Policy Will Be Beneficial To Your Enterprise?
While many business owners may have a number of employees that they feel are extremely valuable, it may not be cost-effective to purchase this type of insurance for all of them. When determining whether or not an employee should be considered for a key person life insurance policy, you will want to consider the full range of impacts that will occur if a particular employee were to be lost in this way. This will include a range of costs that may not always be easy to quantify. For example, the business may face high recruitment costs to evaluate and research potential job applicants. Additionally, many enterprises may find that it can take weeks or months to replacement key personnel. If these factors are true for your employee, investing in a key person life insurance policy may be an effective way of mitigating this financial risk.
What Factors Will Influence The Costs Of The Policy?
The costs of insuring a key employee or another essential person can be surprisingly varied. This should not be surprising given that there are many factors that can be involved in assessing this risk. For example, many business leaders are surprised that it is often required for the employee to undergo a medical examination before a policy quote can be provided. Luckily, the costs of purchasing one of these insurance policies will usually be tax deductible so that the financial impact to your business can be minimized as much as possible.