Protect Your Business with Key Person Life Insurance

As a business owner, you understand the value of your employees,.  Replacing a key person takes both time and money which could cost the business valuable clients during a transition.  Key person life insurance helps to bridge this gap by offering a death benefit that can help cover financial losses that occur at the death of a key person. 

Spire Insurance Solutions has partnered with the top life insurers to help business owners assure the continuity of the business for employees, customers and creditors.  Not to mention, taking out a key person policy on your top employees also affirms their value to your organization which will help strengthen the relationship moving forward.   Key person insurance protection is especially important for maturing small businesses that depend on the contributions of certain individuals.

Insurance proceeds can be used for:

  • Recruiting and developing a replacement for the key employee
  • Paying off debts
  • Offsetting day-to-day operating expenses
  • Supplementing lost revenues until a replacement can be hired
  • Extra layer of business continuity protection if you have plans to sell, merge or transition your business
  • Or in extreme situations, distributing money to investors, paying severance to other employees and closing the business down in an orderly manner.

Protect your business and the future ability to earn with Key Person Insurance Protection.  Reach out to us at ClientService@TheSpireTeam.com or fill out a quote request here.

Keep in mind that Spire Insurance Solutions nor its representatives give legal or tax advice, so you may want to discuss your specific situation with your attorney or tax advisor.

Does Your Business Need Key Person Insurance Protection?

You can take a good look at your business and determine if you have key people who are irreplaceable or so crucial that without them, your business may fall apart.  Many large businesses often have many experienced individuals that can pick up the slack however, most small businesses depend on a few individuals to make the business work.  How much you purchase will depend on your financial needs and what you can afford in premiums.  Here are some things to keep in mind:

  • The higher the face amount, the higher the premium
  • Term policies are usually the best way to go and benefit from lower premiums than whole life policies
  • Typical key person insurance payouts run from about $250,000 to $2,000,000
  • Estimate your financial losses if you were to lose a key person
    • How long would it take you to recruit a replacement?
    • How long would training take?
    • Could you lose clients and revenue during this transition?

Other Key Person Insurance Tips

  • Coverage is a business asset that can help enhance your business' creditworthiness for future borrowing
  • Premiums on key person insurance are not deductible by the company.
  • In order for proceeds from a key person life insurance policy to be tax free, the business must obtain consent from the insured (key person) before obtaining the policy.  
  • The company must file an annual form (IRS Form 8925) with its tax return.  This lists the number of key person policies owned by the company and whether consent was obtained.

Our Locations

Traverse City
Spire Insurance Solutions
3183 Logan Valley Rd
Traverse City, MI 49684

Local: (231) 947-1164

Detroit
Spire Insurance Solutions
400 Renaissance Ctr Ste 2600
Detroit, MI 48243-1502

Local: (800) 686-8664