Key Employee Insurance

• Key employee insurance protects a business financially when it loses an important employee due to disability or death.
  
  

Considerations

• An employee may be considered key if the loss of his experience, knowledge, leadership, relationship with business contacts and partners would adversely affect the company's profitability.
  
  

Fun Fact

• A company is more likely to lose a key employee at the ages of 45, 50 or 55 than it is to sustain losses due to fire, according to the Employee Benefits Administration.
  
  

Benefits

• Key employee insurance will indemnify the company with financial compensation as it tries to replace the employee. The money can be used to train or hire another person to fill the vacant position.
  
  

Misconceptions

• Although all businesses may have important employees, small businesses are more likely to consider key employee insurance because of their smaller workforce. Lenders may even require proof of key employee insurance before approving a small business loan.