If your business relies on one or two key players, key man life insurance might be an important part of your future. Whether that key player is yourself, one of your leading sales people, or an office manager, you owe it to your shareholders to insure the key people. This way the company will have a better chance of remaining stable if one of the key players should become permanently disabled or die.

Key man life insurance is a written to help a company when its survival rests on one or two key people. The company pays the premiums and is the beneficiary if the person dies or is no longer able to perform the functions necessary to get the job done.

Small companies purchase key man life insurance when the owner’s relationships with clients and vendors are what keep the company working.   However, the owner is not always the one who is insured.Sometimes an owner leaves the company in the capable hands of someone else, that person becomes the key man.

A key man life insurance policy can also be used to cover a main salesperson.  In small companies, clients often get used to dealing with one person and refuse to do business with anyone else. Quite often, a company relies on an employee’s personal relationships for clients or discounts from vendors.  In case of disability or death, key Life Insurance cover would give the company a cushion to help it get through the transitional phase while a replacement is identified and allows time for them to rebuild those relationships and if necessary, establish new ones.

The benefits paid through a key man insurance policy are used to either keep the company operating while finding a replacement, or to make it easier to liquidate the company, pay off debts, and split the proceeds between shareholders.In the case of most small businesses, the shareholders may very well be the owner’s family members or loved ones.

Owners insure themselves because their employees are dependent upon the company, even though the company wouldn’t exist without the owner.  The key man life cover policy would guarantee the employees a salary while conducting a new job search.

In some small businesses, the owner and employees have a “one for all, and all for one” mentality.  For others, the lack of office politics makes it a more enjoyable atmosphere, and perhaps a more reliable one. People feel as though they are less likely to undergo mass layoffs commonly associated with large corporations.

Small businesses are also more likely to employ people whom have personal circumstances that intrude on their work lives. A single mother might have to take off or leave early if a child is sick or if school is canceled due to bad weather. Someone with chronic health problems may have to call in sick often. Small businesses often offer the flexibility to deal with such problems when large corporations may not.

For these people who work for small businesses are quite often more dedicated to their employers.  It is not uncommon to find people who began their careers with a small business and would never consider switching jobs.  Employees like this are completely dependent upon the company for their livelihood.  Quite often, the company is also dependent upon person as well.  Not having key man life insurance on that person is an injustice to the company as well as to the other employees.

Small business owners are not the only one who relies on the business for survival. Key man life insurance is the protection every small business needs, not only for the company, but also for their employees as well as their family and their loved ones.