The other major type of income protection and personal insurance is known as key man insurance and can be extremely useful if your business relies heavily on the efforts of one key or hard to replace person.
We at Chicagotappi, believe that this type of insurance cover is extremely important for small businesses, particularly partnerships or family owned business who rely on the production on one or two really important people to make their money.
Who Needs Keyman Insurance?
We came across an article recently which gives some excellent background as to what key man insurance is, how it works, and who should consider taking out a policy. You can find their detailed post at http://www.webberwealth.com.au/key-person-insurance.
The basic premise of how it works is that you take out an insurance policy to cover the business financially in the event that an important money earner (or person with a lot of intellectual property) can no longer work. The key man policy will kick in and start paying the business to cover the lost income resulting from this person being unable to perform their usual duties.
So for fellow Chicago residents, this would be like the Bulls taking out an insurance policy to get paid their loss of income resulting from Derrick Rose’s knee injury last year. They would have received a benefit from their insurance company to cover the financial and other costs due to the loss of their key person.
You can see how important one person can be to a team or a company, and if you don’t have an keyman insurance policy in place to cover yourself, then you could end up losing a lot of money, or even worse, having the business shut down and go bankrupt.
These types of policies can be relatively expensive when compared to car insurance or other more commonly taken out products, but compared to the risks of not having a key person policy, the outlay is well worth it.