How much are you worth to your company? A million dollars of revenue a year? Thirty million? What about the sales manager who's spent 10 years making contacts in your industry? Impossible to quantify? You'd better try.
"If someone buys equipment, they don't think twice about insuring it," says David B. Schulman, a chartered life underwriter and chartered financial counselor for Massachusetts Mutual Life Insurace Co. in Fort Lauderdale, Florida. "Yet the success of a small business depends more on its people than on its capital equipment. If a key individual dies, a business can suffer debilitating financial loss."
Companies can guard against the loss of important figures by purchasing "key person" insurance, life insurance policies that are carried by the business, rather than the individual. Key person insurance can even help your business survive a more likely event: the departure of a valuable employee in pursuit of other opportunities.
"A policy can be structured so you have the cash value of the policy available to you in the event a key person leaves the business," explains Schulman. "In effect, you're putting dollars away for when you need them."
Massachusetts Mutual Life Insurance Co., (954) 938-8800, fax: (954) 351-2468.
Claire Tristram is a business and technology writer in San Jose, California.