Key Person Insurance
Key Person Insurance (Key Woman, Key Man etc.) helps mitigate a bad situation by sponsoring some transition (adjustment) time. The ultimate goal is to increase the probability of business (or family) financial survival.
True Stories: What Can Go Wrong With Key Man or Key Person Insurance
So you already have a Key Person insurance program, and you are certain it’s bullet-proof… afterall, what could go wrong? Based on my 33 years of professional practice, here are some examples of what did go wrong…and all of these outcomes could have been prevented:
- Bay Area start-up grows to 30 employees, including $1,000,000 of Key Person Insurance purchased on all 3 founders. 12 months later, the healthiest of the 3 had died from Cancer (at the young age of 40). Within 2 years, the business failed. Why? Their ability to focus on business was overcome by the grief and distraction of watching a close friend suffer away.
“In retrospect, $3,000,000 to $5,000,000 of increased Key Person protection would have at least allowed them to walk away with something for their investment.”
- Owner of Northern California financial services firm dies in auto accident with no Key Person Insurance (because he had postponed his Key Man Insurance application until he lost a little weight). Without the chief revenue-earner, employees start to resign and soon the customers were phoning the widow at home, asking for assistance. without any financial resources, she was forced to hire an attorney and data forensics firm to extract the accounting data needed to file corporate tax returns and to close down her late husband’s corporation, while dealing with her grief, his business creditors, personal creditors, all of which necessitated the sale of her residence.
“In retrospect, it would have been better to purchase the higher priced Key Man Insurance, then re-apply later after losing some weight.”
- Individual retires after 25 years and starts own business. Within 2 years, is diagnosed with brain Cancer and has to stop working as the disease progresses rapidly. Spouse decides they receive better care at home, than in a nursing facility, but is overcome by the cost $40,000.
“In retrospect, a properly-constructed Key Person Insurance program would have allowed the advancement of cash benefits for such expenses, prior to death. Using an experienced Key Person specialist would have made a real difference to this family.”
If you know a Key Person in your organization or family, make the call today. Get affordable coverage for your business or loved ones.
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