Key employee life insurance. In many a company there is that one
person on the production line that is so valuable that you may wonder
what the company would do if s/he were not there.
When that person takes a weeks vacation you are always calling him or her.
There may be an assistant but there are those little details of your business that only that key employee knows about. As a business owner it would be wise to buy a key employee...
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life insurance policy
on that employee. The amount should be the equivalent 5 years of this
employees income. You see...if this employee should suddenly die it will
take a while to replace him or her...and even if the new employee...the
replacement...is just as smart and as interested in his or her new job
it will take a while before he knows the details of the job.
The relationship with the people with whom you do business is also important. They were familiar with your long term employee...now they have to get to know the new one. Let me give you an example...
Key employee life insurance is vital to the survival of your
company. About 10 years ago, I saw a highly successful construction
company go out of business because of the loss of a key employee. This
employee was in charge of Finance. He dealt with all financial
transactions with the bank.
The banker knew him. The owner of the business concentrated on building multi-million dollar luxury homes in Florida. His wife was in charge of decorating these homes. This was a turn-key type of situation. The company maintained a floating debt with the bank...
When the key employee died the bank got quite uncomfortable
because the owner of the business was on older man...and he did not know
the details of the bank's relationship with his company. The bank
withdrew the floating debt and the company went bankrupt.
Had the owner taken the time to know a little about the finances of his own company...and had he owned a substantial life insurance policy on his life he may not have had that problem.
In addition had he owned a decent amount of key employee life insurance he would have been able to take his time in readjusting to being without his vice president in charge of finance. If he had sufficient key employee life insurance on the life of his valuable employee the company would have survived.
I don't know what ever happened to this business owner but I heard his wife has her own interior decorating company and is doing just fine.
You can use term insurance to cover this need for key employee life insurance or a permanent policy like whole life insurance, universal life insurance, variable universal life insurance or variable life insurance. You can apply the cash values to the key employees retirement income ...if you choose.
Examine key employee life insurance rates here:
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