What Is Key Person Insurance?
For many, starting and successfully running a small business is part of the American dream. Small businesses are also a vital part of Tennessee’s economy. According to the U.S. Small Business Administration, over 700,000 small businesses are operating in our state, accounting for 99.5% of all Tennessee businesses and employing 41.7% of our state’s workforce.
At Farm Bureau Insurance of Tennessee, we believe that something so important – to our state and to the livelihood of fellow Tennesseans – deserves to be protected. Businesses can help protect themselves and the people who work for them in many ways, from having the right licenses and legal documents to getting proper business insurance. But one type of protection you may not have heard of is key person insurance.
What is Key Person Insurance?
Key person insurance is a form of business life insurance. It’s a life insurance policy that a business can purchase on the life of a “key person” – someone whose contributions are vital to the operation of the business. For a small business, that’s usually the owner or the founder. Larger businesses may also purchase policies for other executives or leadership.
What Can Key Person Insurance Cover?
Like other life insurance policies, key person insurance is meant to protect against the unexpected loss of an important person. This type of life insurance is focused on protecting a business rather than personal assets. If the insured person dies, the key person policy can help a business manage financial losses and facilitate a smoother transition.
For a small company, having the right business life insurance policy may make the difference between a business failing after the death of an important person or that business continuing to operate and supporting the livelihoods of the rest of its employees.
Do you own a small business? Reach out to a local Farm Bureau Insurance of Tennessee agent today to see whether your business has the coverage it needs.
