Problems if a Key Person Dies without Coverage: Loss of revenue and sales

Customers leave and go to competitors

Inadequate cash to make payroll resulting in employee turnover

Loans or mortgages may be called by the bank

KeyMan Life Insurance Provides the Solution: The death benefit will provides liquid cash to makeup for lost revenue and sales

The death benefit can be used to train a replacement key employee

The death benefit can pay or payoff loans or mortgages Example: Hugh is a successful executive at his manufacturing company. In order to assure the continued success of the company, a $2,000,000 life insurance policy is purchased based on his economic value to the business. In the event of the Hugh’s death, the Key Person policy is activated and the $2,000,000 insurance policy is used to find a replacement and make up for lost revenue.The beneficiary of the insurance would be his company.

Types of Keyman Life Insurance Coverage

Key person coverage can be purchased by your business as either term life insurance or permanent life insurance.

key man term life insurance

A term policy offers the advantage of lower premiums for funding a key man policy.

Key person life insurance is often written as a term life insurance for a period of 10, 20, or even 30 years.

Are you not sure which term plan is best for your company?

It is often helpful to compare prices on the different term duration’s to gain a better understanding of which plan would be best for your company’s Keyman policy.

Keep in mind, that both twenty and thirty year terms will cost you a lot more money compared to a ten year plan.

For example, take a look at a $1,000,000 10 year term policy at age 50 that costs only $75 per month, compared to $252 for a 30 year term for a 50 year old male.

It really boils down to how long the company needs to have life insurance coverage on the executive.

Let’s take a look at few price comparisons between different term duration’s.

Key Man Insurance Cost

$500,000 $750,000 $1,000,000 10 year 10 year 10 year Age 30 $15 $20 $22 Age 40 $19 $25 $29 Age 50 $42 $64 $75 20 year 20 year 20 year Age 30 $21 $27 $33 Age 40 $28 $41 $52 Age 50 $73 $108 $142 30 year 30 year 30 year Age 30 $32 $47 $58 Age 40 $53 $76 $99 Age 50 $125 $185 $252

* Key Man Insurance Quote on 10, 20, and 30 year term life insurance polices, non-smoking males, preferred plus rate class

key man Permanent Life Insurance

Some firms also elect more expensive permanent life insurance coverage, such as universal life and whole life.

These polices grow a cash value within the policy, and allow the company to retain ownership of these funds which can be accessed in the future.

Both term and permanent policies are seen as a business asset, and can enhance your company’s creditworthiness for commercial borrowing.

How to Qualify for Key Person Life Insurance

The premiums you will pay for key person life insurance are based on many factors like height, weight, medical background, and family history.

Getting business life insurance will require you to go through the application process.

This consists providing your medical background to a nurse when she comes out to do your insurance examination.

The results of your medical exam are then forwarded to the home office for review by the insurance company’s underwriters.

The underwriting process normally takes several weeks from the time you take your examination.

The results of the medical testing can also be used concurrently with business owners needing an additional policy for buy-sell life insurance coverage.

Our goal is to find the best life insurance rates for your company’s key person life insurance coverage.

Business Life Insurance

We have developed a disciplined process to assist successful companies with many of their business life insurance needs.

We find many busy small business owner’s often like to “kill two birds with one stone”.

In many cases, when review your key man policy, we can also take a look at other business planning ideas too. Here are a few other ways we can assist you: