Key Person Disability Insurance

Funding For Replacing Your Key Person

FOR

• Executives
• Sales People
• Physicians & Surgeons
• Engineers
• Most Occupations

Most companies have key employees to which the success and profitability of the firm are directly related. The business would not be what it is without the knowledge, experience and skill of such Key Persons.

While it is routine for companies to insure their physical assets such as their office equipment and buildings, most overlook the obvious need for protecting against the loss of a Key Person as a result of a disability. Yet statistically the chances of a Key Person suffering a disability far exceed the threat of loss on the property of the firm.

The loss of a Key Person can be devastating, not only affecting the profitability of the firm but also productivity, customer relations, employee morale and in general the overall effectiveness of the firm. Protection against the loss of cash flow and the usual increase in costs when a key employee becomes disabled can be obtained with Key Person Disability Insurance.

• What are the contingencies for the company if a key employee is disabled?
• How hard will it be to locate and train a replacement?
• What type of compensation will it take to hire the new employee?
• What percentage of revenue is directly attributable to the Key Person?
• Would the Key Person's disability result in the loss of clients?
• How will creditors respond to the loss of a key employee?

Monthly Benefit

The monthly benefit approach provides significant cash flow to the business following an elimination period of 30, 60, 90, or 180 days. Monthly benefits are typically designed to pay for 12 or 24 months. Benefits amounts are determined by looking at several different factors and are also dependent upon the needs of the firm. Normally 100% of the Key Person's income can be replaced, but often times benefits in excess of this can be obtained. Information which the firm can provide that demonstrates the value and/or the likely loss the firm will suffer in this person's absence is reviewed with this objective in mind.

Lump Sum Benefit
The lump sum benefit provides a capital infusion to the firm in a single cash payment. This approach is typically used when the firm has significant cash flow or savings to get them through a temporary period of disability, but the concerns for a long period of disability which would then create a major financial pinch. The benefit amount can be 3 times the annual income of the Key Person larger benefits are available but subject to financial justification. Elimination periods of 6 or 12 months are available.

Key Employees exist in all companies, and are not solely defi ned by occupation or title alone. Job titles do not defi ne Key Employees; their performance and value they provide to the company does. Typically, we consider Key Employees to be the top sales person who holds all the large accounts, or the executive that maintains all of the important business relationships. While this may statistically be the most common use for Key Person Disability Insurance, it is not the rule. A Key Employee is anyone who provides signifi cant value to a company and whose long-term absence would cause signifi cant loss to the company, such as:

• A well known doctor or surgeon who att racts patients nationwide.
• A hair stylist who is on the cutt ing edge of fashion.
• A stockmarket expert who seemingly can foresee the future.
• An entertainer whose popularity brings the majority of the ratings.
• An architect who is in high demand for unique designs.
• An internet technician who single handedly supports the companies network.
• A chef whose menu creates a line around the block.
• A dentist whose charisma keeps his clients smiling.