Coping With the Loss of a Key Person         

    by Peter Schlactus & Adam Rothman                                [ Back To Table of Contents ]

Today many business owners are learning that key person insurance coverage will assure the survival of their business and 
the retention of their best employees.

Key Person insurance, formerly known as "key man," allows businesses to indemnify themselves in the event that an important 
person dies, retires, leaves, or is disabled. In addition, this versatile policy can encourage key employees to stay with your 
company by funding a deferred compensation agreement or a future partnership buyout.

In its simplest form, key person coverage pays cash to your company, which is usually the policy beneficiary. The key person 
covered could be the owner or it could be someone critical to the business, such as a manager or even an administrative assistant 
who knows everything about how the office runs.

Yet another use for key person insurance is to pay off company debt. Similar to mortgage insurance, it can pay off a loan from an 
important creditor if the boss dies. Lenders like to see such protection in place because it is good collateral and shows good planning.

Face values of key person insurance can begin as low as $50,000 and go as high as $15 million, or even higher. Premiums are based 
on the age and health of the key person, as well as the limit of insurance desired. A wide variety of life and disability insurance 
carriers underwrite key person coverage, so be sure to inquire about the differences between carriers and their policies.

Peter Schlactus, a Certified Insurance Counselor and  Accredited Advisor in Insurance, is Co-President of KBS International Corp., which provides specialized  insurance programs, benefits, and  risk management services to courier companies and executives nationwide. Mr. Schlactus is available to answer inquiries  at 1-888-KBS-4321 or via e-mail at

MESSENGER COURIER MAGAZINE                     [ Back To Table of Contents ]

(c) copyright, 1999 by KBS International Corp.  All Rights Reserved.