KEY PERSON INSURANCE FROM MASSACHUSETTS SPECIALISTS

Some examples of situations where key man insurance might be helpful are:

• Small businesses that can’t function without their owner-operator involved in day-to-day tasks
• Large corporations that have C-level executives with knowledge that isn’t quickly passed on
• Foodservice businesses that rely on an essential chef, brewmaster, coffee roaster or similar person
• Businesses that can’t easily replace employees with temporary worker

At times, lenders may even require key man insurance when underwriting financing for a business that’s dependent upon someone. 

What Protections Are Available Through Key Man Insurance?

Whatever protections key man insurance affords are typically limited to only the person(s) listed on the policy. This helps eliminate ambiguities that could otherwise arise over a person’s essential or non-essential role. Whoever is deemed essential to a business should usually be listed on the business’ policy.

For the persons listed on a policy, the insurance normally provides three distinct coverages:

• Standard Life Insurance, which may cover death of the insured person
• Trauma Insurance, which may cover some injuries and disabilities
• Total and Permanent Disability Insurance, which may cover other injuries and disabilities

The standard life insurance that’s provided is normally much like term life insurance, in that the policy usually pays predetermined death benefits and provides coverage for a specified duration.

As is the case with many insurance policies, the exact protections that a given key man policy provides can vary.

How Can Businesses Spend the Funds Awarded from a Key Person Claim?

In the unfortunate event of a key person policy claim, the funds paid are typically sent directly to the business. There generally aren’t restrictions on the use of funds, but many businesses that receive a claim payment use the funds for one or more of the following purposes:

• Settle accounts payable and maintain employee wages during a short-term absence
• Lower short-term debt during a short-term absence
• Find a replacement for someone who’s permanently absent
• Cover costs associated with closing and/or selling the business
• Give financial investors returns during a short-term, long-term or permanent closure
• Award severance packages to employees and pay contractors any due wages

How Can Businesses in Massachusetts Get Key Person Insurance?

For help insuring a key partner or employee, contact the independent insurance agents at The Feingold Companies. Our Massachusetts agents have the expertise necessary to help you find key person insurance that’s suited to your business needs, and we can recommend the best policy regardless of what insurance company offers it. With our assistance, you can be confident that your workers and business are both well protected.