There are some people who are crucial to the daily to day operation of a company, though it’s often stated that anyone is expandable. What would you do if one of those important individuals was no longer with the company? How would it change your bottom line?
Replacing someone that’s essential to your business can take time. Finding people with the appropriate education, training and expertise in your particular market can be difficult. While you are searching for the right person your business can incur losses. You can protect against these deficits with key man insurance. Key man insurance protects against business losses suffered when one of your key workers, who is crucial for the success of your business, is abruptly eliminated.
This sort of insurance is generally purchased to cover upper echelon workers in mid to large size businesses. You can buy directors insurance to cover people on your board that are actively involved with your company operations. Director insurance shields you from monetary loss if one of your companies owners is abruptly eliminated for any reason. Essential guy and directors insurance is an important element of guarding any size company.
Just like any other type of insurance, key man insurance carries a premium. This would be considered part of the business operating costs. You might think that you really don’t need this insurance, and that directors insurance and key man insurance is not worth the cost of the premium. That is like thinking you don’t really need life insurance to safeguard your family if something unexpected happens to you.
You probably have disability insurance and life insurance, don’t you? You probably do not think that you’ll have to utilize it, but you pay those premiums anyway, just in case. You might never have a claim under your important guy or director insurance, but imagine if one of your key personnel suddenly died? You may not want to think about that scenario, but life can be unexpected. It is best to be equipped for the worse situation than to be caught off guard.
Even smaller organizations can take advantage of important man insurance. For instance, if you have a cafe whose success is dependent on the health and well being of your chef, what would your business do without him? Your customer’s still want the good food and excellent service with or without your chef. This could have long tern ramifications for your businesses bottom line.
A key man insurance plan can protect your gains until your chef returns or until you are able to replace him with a chef that has the same sort of standing and experience.