Imagine you’ve just started out as a new company. You’ve gone in with a friend who is now your partner, you’ve signed up documents and you’re ready to go. A few weeks in, things are going well. You’re organising sales, you’re hiring new people to keep up with the demand and increase for your services, you’re working closely with your partner and you’re pushed to your limits, making sure that you’re maximising revenue for minimum cost.
You’re probably spending all of your time working out how to make your company as profitable as possible, and so is your partner. Have you thought about insurance? By this stage, probably not. It might not be something that you’ve really started to think about, but what would happen to your business if either you or your partner were to suddenly be incapacitated and unable to work for a period of time? In the instance of this occurring, your company might falter, fail or have to declare bankruptcy if you don’t have the funds to cover costs.
Fortunately, there are people who provide a special type of insurance called ‘key person insurance’ and it works to protect the (you guessed it) key person (or people) in your business. The people who are critical to the success of a business – the one who, if they weren’t able to be there any more, would sink the company. You need to have key person insurance on those people! I recently found out more about VFPS Key Person Insurance and I was intrigued to learn how it was possible to protect my business.
I’ve outlined five key reasons why you should invest in key person insurance, so read on to find out how to protect your business and why it’s a fundamental investment.
1. Weather the storm
If something happens to one of your key people, there’s every chance that your company will go through hardship. When a company has an insurance policy on a key person, and if that person unexpectedly dies, the company receives the insurance payoff (because with that key person gone, it usually means the company goes, too). The insurance is designed to help companies to weather the storm of finding a replacement, paying off debts, distributing money and paying severance, if the business is to close, so that the process is orderly. In an ultimately tragic situation, key person insurance gives a company some options and dignity, rather than bankruptcy.
2. Peace of mind
Many of your employees are probably like family – after all, you spend a lot of time at work and the people you work with are people you would want to protect. Key person insurance gives you that peace of mind knowing that you’ve put steps in place to protect the people you employ, in the event of the death of a key person.
3. Flexible options
You don’t have to go and buy a one million dollar key person policy if you don’t need to. There are a range of financial options available to you and you can shop around until you find one you’re happy with.
4. Keep a business alive
It’s sad to think that a business that someone worked really hard to build would collapse without them, but it’s the case in most cases. Key person insurance gives the surviving members of the company or business an option outside of bankruptcy, and allows people to keep working on something that mattered to the deceased or disabled.
Key person insurance provides protection to the partnership and also to investors and shareholders, so it makes your company more attractive and stable as an investment option.
Don’t get caught unaware, be prepared for anything and get in touch with someone to speak about key person insurance today.