Protecting the Business Interests of Clients Using Life Insurance

If you have clients who own or operate a business, then it is likely that they are heavily relied upon for the company’s success – and that it could make for a big impact if they were suddenly no longer there.

In many ways, businesses have similar insurance needs to those of individuals and families. This includes providing a layer of financial protection against the untimely death of the owner (as well as key individuals), and possibly even the need for cash by survivors in order to carry on. Because of this, in order to protect the company – as well as those who are reliant upon it for income – a key person life insurance strategy will oftentimes be put in place.


The Benefits of Key Person Life Insurance Protection

Using a key person life insurance strategy, a policy is put in place in order to protect a business from the sudden loss of a significant individual (or individuals). When going this route, the company is usually named as the owner of the life insurance policy, as well as the beneficiary. In many instances, the business will also pay the premium for the coverage.

If the key individual passes way, the policy’s proceeds are paid to the company, and can be used for a number of needs, such as continuing to pay operating costs during the time a replacement is being sought, or for the time period that it takes to successfully sell the company.

A company that has key person life insurance also benefits by offering security to their customers and investors. Many individuals who do business with companies as customers or stockholders will only proceed if the company in question has implemented a key person life insurance strategy. This is because the customer or investor would not want to lose money if a key person passed away and the company was to suffer great losses.


Implementing a Key Person Life Insurance Strategy

When a business purchases key person life insurance, the policies that are used may be either term or permanent. There are some things to keep in mind prior to determining which type of coverage may be best for a client.

For example, even though a term life policy will typically allow the company to pay a lower premium than that of a comparable permanent life plan, term policies only remain in force for a set period of time. And, in order to renew a term life insurance policy, the insured may be required to pass through underwriting again. In addition, the premium on a subsequent term life insurance policy may be higher than the original policy’s cost.

Alternatively, a permanent life insurance policy, such as whole life, will oftentimes start out with a higher premium cost than a term plan. However, the premium amount will typically remain fixed throughout the entire life of the coverage. This is the case regardless of the insured’s age, and whether he or she contracts an adverse health issue.


Finding Clients to Talk to About Life Insurance

While there are many viable financial strategies that can be implemented using life insurance, the reality is that no strategy will work if you don’t have prospects to talk to about them. If you’d like to have a steady and reliable source of leads for life insurance in your business – which in turn can allow you to earn thousands of dollars more every month – we can help. Just give us a call at 1-800-643-6143 for more details.

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Brian J. Kay, Executive Director, Leads4Insurance
921 Port Washington Blvd., Suite # 3 Port Washington, NY 11050
tel:(516)944-6700 fax:(516)944-5275