Key man insurance is essentially a life insurance policy on a key individual such as a key employee or business owner.
Especially important for small businesses, key man insurance is also sometimes referred to as key employee insurance, key person insurance, or key man life insurance.
The key man insurance policy is owned by the business or corporation. The owner would become the recipient of the insurance policy payout, should the key person become deceased.
Call Huronia Insurance at 1-866-955-8386
to learn more about Key Person Insurance
Is Key Man Insurance Right For Your Business?
For many small businesses, the owners and/or key employees have skills, experience, intellectual property, and contacts that are essential to the company’s overall success. If that key person were to die or become injured or sick and unable to work, replacing that person could be financially difficult for the company.
There is a saying, “No one is irreplaceable.” However, for some companies, there are owners, managers, and key employees who have the experience, skills, and knowledge that would be difficult, costly, and time-consuming to replace.
If your business could not afford the financial loss if a key person were to die or become disabled and unable to work, key man insurance offers a valuable option.
Benefits of Key Man Insurance
A key life insurance policy placed on a business owner or key employee can be very beneficial and crucial to the future of your business. Both life insurance on a key employee and disability insurance plans are available. These compensation funds would allow you to:
- Properly Recruit to Fill the Void – Recruitment and training for key employees can be costly and time consuming.
- Cover Loss of Revenue – The death of a key employee or business owner can be devastating, both emotionally and financially. You can secure your company’s financial health and ease client and lender concerns. Your insurance policy can cover loss of revenue that might occur due to any lost clients, accounts, or lost sales.
- Ensure Business Satisfaction – In the event of a key employee death, your clients, employees, and investors may experience varying degrees of worry over the overall future and viability of the company. The funds from the key man insurance policy will allow your business to continue to operate and will help to reassure people that your business will move forward.
How Much and What Kind of Policy Do You Need?
There are two types of life insurance policies in Canada:
- Term Life Insurance – This is a death benefit policy that is valid only for a specific time period.
- Permanent Life Insurance – This can be either a Whole Life Insurance policy or a Universal Life Insurance policy and can be utilized for long-term savings. Permanent life insurance will cover the insurer for life, as long as the payments are kept up-to-date.
Both are great options when it comes to key man insurance. If you only want to have the policy on the person until they retire or leave the company, term life insurance is suitable. However, some businesses like to purchase a permanent life insurance policy and then gift it to the employee upon their retirement or exit from the company.
You might also like this Globe and Mail article entitled, “Protect Your Business with Key-Person Insurance.”
How Much Will A Key Insurance Policy Cost?
Our Huronia life insurance brokers will work with you to determine the right key employee life insurance coverage. The cost of your life insurance policy will be based on several factors including:
- The policy amount
- The age and health of the employee
- And whether you choose a term or permanent policy
About Huronia Insurance
Moving into our fourth decade, Huronia Insurance Group in Barrie Ontario, services the business insurance needs of companies throughout Southern Ontario, including the Greater Toronto Area. We also offer critical illness and mortgage protection insurance services.
Our life insurance brokers will work with you to determine the right amount and type of key person life insurance necessary to cover your business expenses in the event of an untimely death of one of your key employees.
For more information about key man insurance, please contact our Huronia insurance brokers at 1-866-955-8386 or send us an email. We can also be reached through our online contact form.
We look forward to serving you!
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