If an employee crucial to the function of your business becomes disabled, would day-to-day activity continue as usual or would disorder and uncertainty ensue? Would you be able to maintain the same level of business expectations and revenue stream? How will you cover for the financial loss of the employee or pay for a temporary replacement during his or her recovery? Key person disability insurance could help you answer these questions with confidence. It is designed to provide financial stability in a time of stress and anxiety due to the sudden loss of an important employee.
Who Needs Key Person Disability Coverage?
- Employees who would be extremely difficult, time-consuming or expensive to replace
- Highly skilled employees with unique training
- Employees with exclusive ties to key clients, like sports stars
- Narrow profit margins where a staff loss would mean financial trouble
- Need to protect their revenue stream from loss (ex: hospitals protecting against the loss of a high-earning, respected surgeon)
- Would be devastated if a high revenue-producing client became disabled and unable to perform
Key Person Disability vs. Key Person Life
When most business leaders think of purchasing key person coverage, they turn to life insurance. However, industry leaders point out that the chance of losing a key person to disability is 17 times greater than losing a key person to death, and the costs of hiring a recruiter to replace the key person and training him or her for a short period of time could be much more exorbitant than finding a permanent replacement.