Finding the Right Keyman Cover by Comparing Quotes Online
Everybody who is an employer knows how important it is to find and retain the services of key personnel. If you don't have the right person in the right job you will have to do a lot of the work yourself. If you can't do this your business will suffer and never achieve the potential it would otherwise be expected to achieve. If the right person can't be found your business will flounder and always be at risk. Find the right person and the picture changes dramatically.
Receive Preliminary Quotes for Keyman Insurance
Once you have found the right person, no matter what niche he or she fills in the business structure, you won't want to lose him or her. You can secure the key person’s services to a large degree by offering an increased remuneration and improved incentives, but where would your business be if any one of your key personnel suddenly died or became too sick or injured to be able to contribute any services to the business anymore. You would of course stand to lose much more than a good employee, your business could suffer financially once again and any progress you had earlier made could be lost to your competitors.
Insuring Key Personnel is Risk Insurance
An astute businessperson would not put their business to such a risk and neither do they have to, as they know they can cover the risk by taking out what is known as key person life insurance. This type of insurance will cover your business loss should your key personnel have to cease work through suffering a critical illness or injury, becoming totally and permanently disabled or if they should die. If any of these events were to take place your business would receive a lump sum benefit from which you would be able to keep the wheels of business rolling while you began your search for a replacement.
Such an insurance pay out would, in the least, act as a stop gap while you re-arranged your personnel to fill the void while waiting to set up something more permanent. All businesses have to keep making profits to be able to survive financially. Put simply they all have to earn more than it costs to run the business. Whatever you hear about service to the community and being a good corporate citizen, nothing is as important as the ability to be able to continuously return a financial profit. Key personnel help do this for any company they work for. The loss of such people can put the company at risk if this profitability is not retained when any of the key people are no longer able to contribute anymore.
Comparing Quotes for Key Person Insurance
Because there are many life insurance companies offering businesses key person insurance you have to make sure the type of policy you sign up to is the right one for your particular business. This can be an onerous task and one that you might not feel you have the time available to do justice to. But before you put it on the back burner as a task you will get back to when you have more time, be assured that it is not all that hard to actually find an insurer with a policy that can be both low cost and pay high amounts in benefits. This is because the most suitable type of insurance for this particular purpose is what is known as term insurance. Term insurance, as the name implies, will cover your key personnel for whatever term, or period, you take it out for. If your key person dies or becomes totally and permanently disabled and unable to work anymore during the term of cover, your business will receive the amount you have him or her insured for. If nothing occurs and your key personnel survive the term of cover, the policy will simply expire and the premiums paid will be forfeited to the insurance company, much the same as the insurance you have on your motor cars and buildings etc.
When you do put the time aside to protect your business with key person insurance make sure you have decided on the following factors first:
- Have your mind made up on whether you need trauma and/or total and permanent disability insurance added to the life insurance cover you are about to get quotes on. If you bundle all these insurances together you will probably be able to negotiate a cheaper overall rate than taking out each separately.
- Put your insurances with a large reliable life insurance company. You won't have time to play along with companies you have never heard of before even though their premium quotes might be extremely low. For a trouble free business deal it pays to stay with the more reputable companies with the highest AAA ratings.
- Know how much cover you need. This can be the hardest figure to decide on but be realistic when working how much the loss of your particular key personnel would mean to your business. You will also need to anticipate how long you think you will have wait before finding a replacement.
Key person insurance is offered by many insurance companies, each with various coverages at different cost packages. Surprisingly, key person insurance is not as expensive as most people think it is. It is important to weigh your options and get quotes from various insurance companies that offer these services. To do this, use the following tips:
- Check for quotes online. In the past, companies who wished to purchase key person insurance would need to set an appointment with an agent to get the details of the packages available. These days, insurance companies have websites that contain all the information you need in order to pick the best package to purchase. It shows that a strong online presence is an advantage for both parties; it helps the insurance company garner business by having information easily available. Clients have no problem getting their questions answered and the information available will help them weigh their choices quickly and efficiently.
- Choose a reliable company. Having an online presence helps you easily search for details about certain companies that provide these services. It is ideal that you look into insurance companies that specifically cater to the needs that you have. The circumstances and conditions of key person insurance may be different from the other insurance policies.
- Buy directly from the insurance company if you can. While insurance agents can be helpful when it comes to getting affordable insurance services, be aware that they earn money by getting a commission for every referral they get. The cost is already included in the prices they will quote to you, but if you go directly to the insurance company, you can shave off a couple of hundred from the overall cost.
- Compare the Coverage. Each key person insurance policy has different coverage from the next. While in general they offer similar features, it is the details that can help you decide which service you will go with.
Here are some examples where key person insurance can be used:
- It can be used to fund recruitment and training of a replacement key person in the organisation. This is particularly handy if the key person holds a position that requires special skills, experience and training.
- If the company encountered some financial difficulties, it can be used to help keep the company afloat until it is steady on its feet again. It helps provide funding or financial backing for the company should they want to expand, or perhaps work on a new product or service. Keeping key employees covered shows that you have a contingency plan and are prepared for any liability that may arise.
- It can be used to help provide support (such as salary continuation or payment of medical bills) for the surviving spouse or family of the deceased employee. Employees need to work in order to generate income for the business, and they are rewarded with salaries and other compensation. If the key employee can no longer meet the expectations for this job, the key person insurance can work as a source of income for them or their surviving spouse.
- Raise the Deductible. When you are looking into insurance quotes, pick out a deductible that may be higher when compared to the others that you have already picked. A higher deductible lowers the amount you are liable for. It also lowers insurance premiums.
- Set a Standard. When you are looking for something, particularly a service or a product you have a specific need for, you have a criteria that you want to keep in order to ensure that what you get will be worth your money. Looking for insurance is similar. Note the things you feel key person insurance should be able to provide you. This is not just the coverage of the service, but also its costs, the terms and conditions and limitations.
- Ask Questions. Many people are not comfortable asking questions, thus they end up in undesirable situations. They may presume to know things and get frustrated when they find out that what they wanted was different from what they got. In buying insurance, it is important that you ask to clarify the things you do not understand. Sure, the quotes are available, but sometimes the things that are not clearly spelled out are actually the ones you need to know. Read through the quotes and voice your concern. No question is stupid if it is for the good of your company.
If you feel all this is beyond you, you can always retain the services of a financial adviser who is skilled in this particular area. He or she will help you in choosing the right insurer as well as obtain the right amount of cover.
Keep the tax deductibility rules in mind
Different guidelines dictate whether or not you can deduct premiums or benefits from tax. This is determined by whether you select revenue purpose or capital purpose for the policies tax requirements. The table below breaks both processes down for easy viewing.
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