|
It’s not uncommon for a business to hold key employee
life insurance coverage. By insuring their key employee
they understand the business may not hold up if one of their
key
employees happens to die.
When insuring a key employee death is often thought of by
a business owner, although disability is often disregarded.
With a key employee being disabled they often face the same
issues as they would if that key employee were deceased.
Some results of disability are:
- Recruiting costs to replace the key employee
- Training Costs to train a replacement
- Lost revenue from the disability of the key employee
The key person disability plan will shield the business by providing finances
to help cover the possible lost earnings and the costs of finding and training
a substitute.
A number of of these plans offer a replacement benefit which
will compensate the company for some percentage of the replacement
costs (up to certain limits) for the first 12 to 24 months
after the key person’s disability occurs.
Occasionally the key person disability plan will be convertible
to individual coverage if the business has no further need
for the coverage, the insured needs additional individual
coverage and the insured meets certain income and, possibly,
physical requirements.
|
Key
Employee Disability Plans
