Colorado Key Man Insurance
What it is
Key man, or “key person” insurance a term used when a business purchases a life insurance policy on one of its employees and designates itself as the beneficiary. While structurally, it is no different than a normal life insurance policy, how it is used is what makes it different. For example, say that you are a restaurateur in Denver. You and your partner run one of the most successful high-end restaurants in Colorado. You handle the books, the back room duties, deal with hiring the staff, etc. and your partner runs the kitchen.
As a top-rated chef, her expertise is invaluable; she selects the menu and wines, creates the recipes used everyday and keeps on top of the current culinary trends, creating memorable dining experiences. Without her expertise and skill set, the restaurant would flounder, and finding a replacement is not as easy as putting an ad in the paper.
In a situation like this, key man insurance could help cover the cost of finding and hiring a replacement, as well as covering business costs (including employees pay) in the interim. With key man insurance, the business receives a lump sum payout, which it can use however it needs.
Who needs key man insurance
Other than sole proprietorships (who would benefit more with a personal life insurance policy), almost any business in Colorado can purchase key man insurance. In order to know if your company needs this coverage, it is important to ask if there is someone there, who if they passed away, would severely impact the company.
If there is someone, then the next step is to determine how much coverage the company will need. There is a lot of advice out there regarding the type of insurance or size of death benefit, but start with looking at the basics. How much would it cost to train/hire a replacement? Can they be replaced? Would the business have to close down in the interim? Would the business have to be sold, etc.? eed.
How we can help
As an independent insurance brokerage in Colorado, we can offer our business clients quotes on key man insurance from some of the nations top insurance companies. We will sit down with you and discuss your company’s individual needs and help find the level of coverage that suits them. With agents all over Colorado, including Denver and Colorado Springs we have helped many businesses over the years find exactly what they need.