Key person life and disability insurance can help business leaders safeguard their company and ensure the viability of their larger succession planning strategies for years to come. Since key person insurance provides coverage in the event of an essential team member’s death or incapacitation, it offers companies a vital form of financial protection. Of course, if you’re looking to get a key man insurance quote, you already know this. What you might not know is how to go about getting an accurate quote or estimate for key person coverage, or how to find the lowest price possible for your situation.
Thankfully, that’s where we can help. Here’s everything you need to know about securing key person insurance for your company:
First things first! Before you can determine how much key person insurance may cost your company, you have to identify all possible candidates for the coverage. Generally speaking, business leaders should seek to only invest in key person coverage for professionals who are integral to the success (or even existence) of the company. Some candidates for key person insurance might seem obvious, like CEOs, business owners themselves, high-ranking managers, and top sales professionals.
However, some professionals in other roles may possess highly specialized skills or knowledge that is valuable to the company. Or they might generate a significant part of company revenue. Note, businesses may take out more than one key person policy at a time. And, finally, a business must get consent from the employee to secure a key person policy.
Generally speaking, business leaders should seek to only invest in key person coverage for professionals who are integral to the success (or even existence) of the company.
Finding a Starting Point
Once you’ve identified your candidate(s) for key person insurance, the next step is to arrive at an estimate for the amount of coverage you’ll need. Why is this important? Businesses need to accurately assess the amount of coverage required from a policy. Underestimate an employee’s worth and the coverage provided from a key person policy may not be sufficient to manage the costs and losses associated with their absence. Overestimate an employee’s contributions and businesses may end up spending thousands of dollars on superfluous coverage.
The best way to arrive at a smart estimate for key person coverage is to use a calculator that considers all of the relevant factors — such as the key person’s salary, their contribution to overall revenue, and the amount of time required to replace the key team member.
The good news is that we’ve developed just such a calculator — which you can use here for free:
Getting an Accurate Quote
Shopping for insurance coverage is, unsurprisingly, more nuanced and complicated than making a “regular purchase.” That’s because different insurance carriers use different methods to assess the health of the individual in question. Three different insurance carriers could receive the same application and assess that same person’s health in vastly different ways. In practical terms, this means that there could be significant disparities between the cost of key person insurance coverage based solely on the insurance provider.
What’s more, insurance carriers typically give quotes (estimates) to brokers and agencies before the candidate’s health assessments are complete. So an insurance provider’s quote may not be an accurate reflection of the actual cost of the insurance.
In order to help businesses navigate this process, we’ve developed a unique and independent service called the WayPilot Program. When you sign up for this service, our team will work with insurance carriers to collect accurate quotes delivered after all health assessments have been made. This will allow your company to quickly and easily compare competitor prices and pick the best solution for your needs as we can find you the best price every time. Learn more about this program here.
At Blue Herring, we have years of experience helping businesses in your exact situation and we are the ONLY company with a WayPilot Program. We know how to ensure you get the best quote possible and set your business up for success for years to come. Contact us today to get a quote for key person insurance!