Key Person Life Insurance

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Key Person Life Insurance

 

What is Key Person Life Insurance?

This coverage is designed to protect your business upon the loss of a key employee. The tax-free proceeds from this policy can be used to find, hire and train a replacement, compensate for lost business during the transition, or finance any number of timely business transactions.

 
 

When is Key Person Life Insurance needed?

Key Person Life Insurance is often required in order to obtain funding. Venture Capitalists will want an assurance that they can recoup their investment if something happens to the founder of the company, or to the CTO.

 
 

Why do I need Key Person Life Insurance?

Key Person Life Insurance is a way for investors to protect their investment. Usually, one or two key people represent the technical genius or creative talent in a new venture. The sudden death of such a person can have a disastrous financial affect on the company. It can weaken the company's credit rating, or require the sale of a portion or all of the business if there is no way to cover costs while a replacement person is found.

 
 

Can I insure the life of a key employee?

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.

 
 
  • Close to 2 decades of experience insuring hedge funds (1st customer: Tiger Management)
  • You work directly with principals of the firm both – before and after the sale.
  • Well-established company: 4th generation privately held firm opened in 1895.
  • InsureHedge specializes in protecting hedge funds.
  • As a brokerage firm, InsureHedge represents all specialty insurance products for the Hedge Fund community, so we can market your account aggressively and secure the best pricing available.
 
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