Human resources are a company’s most
important asset. Particularly in the case of technology companies,
where the future success of the company is dependent on the
founder remaining with the company. Accordingly, it is important
for an emerging growth company to prepare for the unfortunate
chance that the founder of the company or key personnel cannot
carry out their responsibilities. Every technology business
employs people whose contributions are of vital importance.
In a small business, these key employees have a more direct
effect on the bottom line, because you don’t have multiple
employees with the same skill sets and levels of talent. If
your key employee’s departure is planned, as in the case
of retirement or voluntary termination, you can prepare for
the loss and take steps to minimize its impact. However, if
the employee becomes disabled or dies, the loss is unpredictable
and leaves your business exposed to financial risks.
If a key employee dies, the employer receives the policy’s
income tax-free death benefit and can apply it towards business
expenses or losses caused by the employee’s death.