Streetsmart insurance Blog
Key person insurance (also known as key executive insurance or key employee insurance) is designed to cover any losses that are associated with losing an essential employee. Whether you’re an executive at a Fortune 500 company or an entrepreneur running a brand new start up, key person insurance can protect the most valuable people in your business.
There are two types of key person insurance: life insurance and disability insurance. Key person life insurance can cover any expenses, wages, and operating costs associated with the death of a key employee, while key person disability insurance is designed to cover any expenses, wages, and operating costs associated with the long term or permanent disability of a key employee.
For example, imagine that Bob and Jo owned a software company called B&J Computers. Bob was a software engineer with over thirty years of experience in the IT industry, and Jo was a CPA. Bob designed the software for B&J Computers himself and worked with customers to tailor each software package to their company’s computer system. Jo ran the day-to-day operation of the business, and was involved of every aspect of the financial management of their start up.
One day, Jo didn’t show up to work. Bob was concerned and called Jo on his cell phone. When Jo’s wife picked up, Bob knew that something was wrong.
Jo had a heart attack the night before and was rushed to the hospital for open heart surgery. The doctors assured Jo that his prognosis was good, but they told him that he should be prepared for a long recovery. Jo would not be able to return to work for four months.
Bob was able to use their key person disability insurance to cover the extra costs associated with losing Jo. Bob hired an office manager to run the administrative side of their business while he concentrated on software development, customer service, and helping his friend and business partner recover from surgery.
Street Smart Insurance is committed to providing affordable coverage. Whether you are looking for your first business insurance policy or you are shopping for a better price, our agents are ready to help. Call us at 732-462-8343 for a free quote!