Most businesses seeking to purchase key man insurance only buy life insurance and never even consider disability insurance. The fact is, at most ages, the threat of a disability is significantly higher than the likelihood of death and the financial impact on the company is just as severe. Key man disability insurance is therefore just as important as the life insurance. For more information or to obtain a quote, see What is Key Man Disability Insurance.

Most business owners or companies considering key person insurance do not realize that there must be financial justification to obtain the insurance. In other words, the amount of insurance coverage that is available is strictly based on a realistic and justified risk of loss to the company. If the amount of insurance applied for does not accurately reflect the inherent risk, then available coverage may be limited. For example, a start-up company with no revenues will be hard pressed to insure their CEO for $5 million simply because the company’s investors are requiring it. The need must be justified by a realistic risk of loss. For more information on the financial justification requirements see, Key Man Insurance Underwriting.

In most cases, proceeds received from key person life or disability policies are received tax free. Therefore, policy premiums should not be deducted as a business expense.

The process of securing a key man insurance policy takes time. Whether you are considering a life or disability policy, a good rule of thumb is 4-6 weeks for approval. Don’t make the mistake of waiting until the last minute. Start your key man application early and give yourself enough time for the insurance company to approve the policy. For more details on the requirements to obtain a policy see, The Process of Obtaining Key Man Life and Disability Insurance Policy.

When applying for key person insurance, it is important to provide accurate and detailed health, hobbies and lifestyle information. We represent most of the nation’s top insurance companies and each has their own “niches” where they are competitive. If all significant information is disclosed up front, the insurance company that will offer you the most competitive policy based on your specific circumstances can be easily identified. However, if previously unknown details are uncovered during the underwriting process, the likely result will be a higher priced policy or having to reapply with another company to secure a better rate. See, Underwriting Key Man Insurance.

Working with an experienced independent agent is critical to obtain the best key man insurance for your business. While key man insurance is simply life and disability insurance, there are significant differences in the way the insurance companies view these cases. Over the last 13 years, MEG Financial has assisted thousands of businesses all across the country with their key man life and disability needs. During this period, we have gained a specialized knowledge in this field and have developed the experience required to assure that your business gets the right policy at the absolute best value. For more information on our company, see About MEG Financial.