There are a lot of variables when it comes to the smooth operation of any business. Regardless of the size of the company, there are usually important individuals that have an integral role in its success. When these key people are unable to work, or are injured or die there are often catastrophic effects on the business as a whole.
A company can obviously not anticipate when an accident or tragedy may strike; what it can do is to take measures to protect the potential losses and liabilities by choosing to purchase Key Man Insurance. Here are six areas to explore when considering such coverage:
Your Public Face
Public opinion is an important thing for many companies. The identification with this figure by the general public can certainly affect sales as well as stock share prices. In many companies, there is usually a leader or spokesperson that is recognized as “the face” of that business. This person is also usually someone who is a highly contributing member of its success, so losing them could have a catastrophic impact.
Young Employees are not Immune
Your principal or key employee may be youthful and seemingly healthy—just starting out in their career—but this does not mean they are immune from injuries, accidents or sudden onset of an inherited disease. If you fail to cover them, just because they are young, this mistake could bring your business to its knees.
Throughout the life of a company, there are sure to be times when the business needs to seek out funding or financing. This may be for research and development of a new product, or to assist in an expansion or merger. Whatever type of funding is being explored, all financial institutions will highly scrutinize the company, its assets and the employees. If there is an important employee that is not covered by Key Man Insurance, the bank may not be willing to take a risk and approve the funding since not having this insurance is sure to be seen as a liability.
Essential Systems and Procedures
When a key individual is no longer with the company, there is often a good deal of information that can be lost. Procedures and specifics that were only known to that person may not have been well documented. With Key Man Insurance, a crucial step is to have documentation and plans in place in case this person is suddenly out of the picture. This would include manuals and directions that would help the company keep the position and the duties going in their absence. Also, a specific hiring plan should be included; when such an integral staff member is gone, it is essential to correctly recruit and get the best person to fill the vacancy.
The Company Structure
Executives and principals in the company are often shareholders and have financial stake that are transferrable to family members in the event of death. In these circumstances, a company should have procedures in place to ensure that the best interests of the business are being considered; not having this planned out could potentially cripple a company.
In every industry, there are employees that have extensive experience as well as specific schooling and advanced degrees. When it comes time to replace these important employees, Key Man Insurance will be helpful to ensure that the loss of the employee is not detrimental.
Disasters, injuries and death are never expected when they happen. Key man coverage could be vital to ensuring your company’s ability to continue after an “irreplaceable” person has been taken out of the equation; providing peace of mind and assistance should something unfortunate occur.