Does Your Business need Key Life Insurance
One variant of California life insurance is that taken out by companies on one or two key employees. Known as key employee insurance, this coverage financially protects a firm against the death of its key employees, providing compensation for any loss of earnings incurred.
According to figures published by the National Association of Insurance Commissioners, 71 percent of companies questioned in their survey said they relied heavily on the presence of one or two key employees for their continued financial well being. However only 22 percent said they had taken out key employee insurance to cover the death of the key worker or workers.
How Much Is Needed?
The amount of coverage purchased on the employee will depend on compensation needed for the replacement of the worker, including training and recruitment fees. Any loss of earnings suffered by the company by the death of the key employee will need to be factored in.
The policy is usually owned by the company and becomes payable upon the death of the employee. It’s a form of California life insurance with the beneficiaries being the firm not the family. It can also be used by in conjunction with another agreement drawn up by business partners to ensure arrangements are in place that would ensure neither the deceased partner’s family nor the surviving business partners would be out of pocket as a result of the death. Please contact us for further information if you are interested in purchasing such coverage.