When Key Players Can’t Work

Insurance Could Help Protect a Business’s Most Important Asset

For most of us, the odds of dying young are fairly remote. The probability that people between the ages of 30 and 60 will live to age 65 ranges from 85% to 95%, depending on gender and age.¹ But did you know that the odds of one out of any two people dying before 65 are significantly higher?

Consider a two-owner business in which both owners are 45 years old. If both are men, there’s a 24% chance that one won’t make it to 65; if both owners are female, there’s a nearly 20% chance.²

It’s likely that your company relies on a few key players whose disability or premature death could endanger the company’s future. In fact, the risk is real enough that you may want to consider insurance to help protect against such an outcome.

Keys to the Business

Key-person life insurance can help offset the financial consequences resulting from the death of someone upon whom the company relies for success. If the insured dies, the policy pays a death benefit, up to the policy limit, that could help the company bridge any financial gaps created by the loss while the survivors decide how to proceed.

Key-person disability income insurance is also important because the chances of suffering a disability are much higher than the risk of early death. At age 50, a long-term disability is 2.3 times more likely than death for men and 3.8 times more likely for women.³ There is a 59% probability that one of any two 50-year-olds will experience a long-term disability before age 65; the odds rise to about 74% for one of any three people of that age (see table). The proceeds from a key-person disability policy could help pay the disabled executive’s salary in the event that the business needs to hire a temporary replacement, or to help defray other costs associated with lost productivity.

The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. Before implementing a strategy involving life insurance, it would be prudent to make sure that you are insurable.

Equipment can always be repaired or replaced, but the same cannot be said of people. Protecting your company against the unexpected absence of key players could help keep the doors open if tragedy should strike.

1–3) 2011 Field Guide, National Underwriter

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2011 Emerald Connect, Inc.

Joe Swanson is licensed in MN, WI, IA, and SD to offer insurance products, and life insurance (including variable life), annuities (including variable annuities), and is securities registered in CA, IA, MN, ND, NJ, NM, OH, SD, WI, and WV and adviser registered in MN. Cindy Henry is licensed in MN, NE, OH, and WI to offer insurance products, and life insurance (including variable life), annuities (including variable annuities), and is securities registered in IL, MN, WI, and WV and adviser registered in MN. Peter Hyjek is licensed in CA, GA, IA, MN, ND, NE, OH, and WI to offer insurance products, and life insurance (including variable life), annuities (including variable annuities), and is securities registered in CA, FL, GA, IA, IL, MN, MO, ND, NJ, OH, WA, and WI and adviser registered in MN. Andy Tighe is licensed in MN to offer insurance products, and life insurance (including variable life), annuities (including variable annuities), and is securities registered in MN and WI and adviser registered in WI.

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