Colorado Key Man Insurance
Whether it is marketing firm, a top Colorado law firm, social media start up or video game giant, many businesses rely on the individual skills and talents of key personnel.They could be the CFO or the head designer, game writer or storywriter, or even the founder, but for many companies, if one of these individuals were to become seriously ill or suddenly pass away, it could be devastating to the company.In some cases, companies end up shutting their doors. One way that businesses can help mitigate this is by purchasing key man insurance.
What it isKey man, or “key person” insurance a term used when a business purchases a life insurance policy on one of its employees and designates itself as the beneficiary. While structurally, it is no different than a normal life insurance policy, how it is used is what makes it different. For example, say that you are a restaurateur in Denver. You and your partner run one of the most successful high-end restaurants in Colorado. You handle the books, the back room duties, deal with hiring the staff, etc. and your partner runs the kitchen.
As a top-rated chef, her expertise is invaluable; she selects the menu and wines, creates the recipes used everyday and keeps on top of the current culinary trends, creating memorable dining experiences. Without her expertise and skill set, the restaurant would flounder, and finding a replacement is not as easy as putting an ad in the paper. In a situation like this, key man insurance could help cover the cost of finding and hiring a replacement, as well as covering business costs (including employees pay) in the interim. With key man insurance, the business receives a lump sum payout, which it can use however it needs.