Legos At Work>As a small business owner, you may employ at least one individual who is essential to your success. This person may be a partner or have a unique expertise that's unmatched.


If this person's exit from the business is planned, you can prepare for the loss and take the necessary steps to minimize the impact. However, if the departure is unplanned, then your business can be exposed to financial risks.

In this scenario, key person life insurance can protect your business. Here's how it works:

  • You purchase life insurance on the key individual(s).
  • You are the beneficiary of the life insurance policy, and apply for and own the policy. If the key employee dies prematurely, the policy pays out to you.
  • Tax-free funds from the policy can be put towards finding, hiring and training a replacement employee. These funds can also be used as compensation for lost business during the transition and financing timely business transactions.
  • The policy can be transferred to a departing key employee as a retirement benefit, or to a different key individual upon the retirement of the original key employee.
  • The policy can be used to buy out the key employee's shares or interest in the business.

Premiums for the policy are based on several factors, including the key employee's age, physical condition and medical history. The amount of coverage also affects the insurance rate.

Contact Heritage Insurance today about your key person plan.


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