How To Find The Right Key Man Life Insurance

Posted by John Howard

July 28, 2010

by Fanny Millar

Insurance is all about giving protection against or offering compensation for future loss. It is with respect to this that as someone who owns a business you need to consider having a key man life insurance. Getting this insurance will protect your business from experiencing any sort of problem due to the absence of a principal employee usually as a result of death or even disability.

You see key man life insurance is a cover taken for critical members of staff of your organization without whom major work in your company can be disrupted. Every member of staff of a company is important, but there are those whose replacement when such need arises is vital to the continued existence of the company and such replacement does not come cheap.

And this necessitates the need for getting this insurance. Besides death another cause of losing critical staff can be disability and this should be taken into consideration as well when taking this insurance. As statistics like one in every five individuals being disabled for a minimum of one year just before their 65th birthday should serve to motivate you.

Okay so how does this work? First of all it is necessary to say at this point that the insurance when taken will be the company’s property taken on behalf of its employee(s) and so will be the beneficiary. You see a business outfit can buy key man life insurance policies for vital staff members to cover the money that will be required to replace them as soon as such a need comes up as a result of death or disability.

An important item is that the policies when gotten for the vital staff belong to the corporate outfit and this only offers protection for the outfit alone. Consequently, when the cold hands of death take this person, it is the company that gets rewarded and has the right to use the fund the way it wants to.

Now if you, as a business owner is covered under key man insurance, then you are ensuring the continuity of your business, which is good, but what about your personal assets and ensuring your beneficiaries get what you left them without going through probate proceedings. Well one good way to do this is setting up a family trust.

A family trust if you must know is also known as a revocable living trust and is set up when one is still living and subject to the terms being changed. The way this is normally done is this: ownership of part or all of your property is transferred to a trust created by you. This trust is eventually held and managed by a third party given such responsibility by you.

However, before picking key man life insurance or creating a family trust you should make sure that this is what you need. If you are not sure about this after reading all you can about it, then seek guidance from a professional.

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