If you own a business, making sure that it is properly insured is extremely important. One type of insurance that business owners should consider getting is key man insurance. This type of insurance will provide a unique type of coverage and is often sought after by a variety of different parties.
What is Key Man Coverage?
If you own a small business, or a major contributor to any organization, the future of the organization may lie in your ability to continue to operate. If you were to suddenly pass away or were not able to continue to work for any other purpose, there could be a chance that the business could struggle in your absence.
In these situations, a vendor or a bank that has provided you with terms or money could end up losing money if you are not able to repay your business debts. Because of this, having a key man coverage policy in place could be beneficial. In the event you pass away or are no longer able to work, the key man policy would kick in and provide coverage to those that lost money due to your absence from the company. This type of coverage is essentially a life and disability insurance policy that is placed on the owner or other key members of a company.
Who Requires Key Man Coverage?
Getting key man coverage is very common for a lot of business owners. There are many situations in which someone would want you to have this type of coverage. One example of this is if you have taken out a business loan and need to repay it over time. If a bank sees that the business would struggle to operate without your presence, they likely will require you to have this type of insurance coverage.
Many business owners will also like to get key man coverage in an attempt to protect their employees. Business owners likely know that their employees could be out of a job if the owner was to pass away. Because of this, the key man coverage could provide a form of severance in these situations.