Do you have key employees in your business?   How big of a hardship to the business would it be to lose that employee?  What type of financial loss would there be and what type of fall off in production would there be?  Would you have the money and resources to hire someone else from the outside that might be able to stop the proverbial bleeding?

These are all important questions we ask business owners when we meet with them.   Good people are what make a great business and it is important to consider what the ramifications would be in losing such a person.   Would a windfall of money be helpful with such a loss and transition?  The answer would obviously be yes to this question.  Basically, this type of policy is taken out on a key employees term life insurance and if anything happens the death benefit goes to the company.  This gives the company money to deal with the loss of the individual and money to make an effective transition.    The biggest challenge to overcome with business owners often times is that they understate how much a loss would effect them.   How will it effect your bottom line and how will it effect other employees?

Usually for a small sum of money, this liability can be covered pretty easily.   If this is a valuable employee, you can consider turning over the ownership of the policy to them at some point.   Maybe it is some type of incentive for staying on for a period of time.  There is no limit of how many employees you can have a key man policy on.   Some business may have one or two key people and others may have 5 or 10.   This is a great application of life insurance and if you have a business, something to really consider.