Whether your business is a startup or a well-established company, it has its own share of risks. And most of these deal with financial concerns. That is why it’s essential to purchase insurance that will keep your business secure against all eventualities. This is where key person insurance comes into the picture. It’s a type of insurance that protects key people in your business. Read along and discover your options when purchasing such policy.
Term life which is also referred to as key man life insurance is a short term insurance policy. It covers the entire company instead of a single person only. This means the company will also receive all the benefits entailed in the policy. However, premiums will also be paid using company cash. It is considered as the cheapest type of policy under key person insurance. Here’s a list of its four most common forms.
- Guaranteed level term
- Annual renewable term
- Return of premium
- Lifetime guaranteed term
Whole life insurance
This is often referred to as permanent life insurance. You will most likely pay a higher amount of premium during the first few years to lessen the cost once you get older. Similar to universal life insurance, whole life also builds cash value that is tax deferred over time. The premium you must pay is locked in, making coverage guaranteed.
Income protection key man insurance
This particular policy exists to provide extra protection to insured key personnel. In the event that the insurance holder is involved in an accident or suffers from extreme illness, this policy will pay out his monthly benefit. Usually, such insurance is bolted into other policies and coverage to serve as additional protection.
Universal life insurance
If you want to be covered for a longer period of time, you can opt for the universal life insurance. It’s a permanent insurance policy that is quite affordable. Just like whole life insurance, universal life also has tax deferred savings. Because of this unique policy, insurance amounts and premiums turn flexible and easily adapts to various business changes. Here’s the list of the most popular type of universal life insurance.
- guaranteed universal life
- Flexible premium adjustable life
- variable universal life
- Equity indexed life
Partnership protection insurance
Another policy under person insurance is called partnership protection. This is used to protect business partners. Each partner will technically own the coverage of others. This insurance can be taken out as stand-alone policy or with another policy attached.
Shareholder protection insurance
If you’re running a large company, profit and shares become more valuable. Because of that, it is wise to obtain shareholder insurance protection. This is to protect shareholders and as well as their value of shares. It’s also advisable to partner this with other policies.
When dealing with business insurance, equipping yourself with the right knowledge is a must. It means getting the right type of coverage your business needs and not only settling for an insurance policy with the cheapest price.
Suzzane Edwards is a financial advisor who writes for Needing Advice, a UK based financial website that offers businesses professional advice on Key Person and Key Person Cover .