Key person insurance: A vital tool for startups
October 23, 2024 by Jonathan Selby
Key person insurance, or contract frustration insurance, is a crucial risk management strategy for startups that rely heavily on specific individuals for their success. This type of insurance provides financial protection in the event of a key employee’s death or disability, ensuring business continuity and mitigating potential financial losses. Let’s review how this policy can best serve early-stage businesses.
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Wink’s Moore on the Market: I just had to explain to one of my newer employees, why I take out key person insurance on the people that work for me.
We are a small business, and would be crippled if we lost our key employees. That is why we use life insurance, to help mitigate the risk of losing someone to death.
That said, I didn’t realize that most people use term insurance for key person policies.
I try and keep my employees forever, and use shameless benefits like a 25% dump-ins to their retirement plan, unlimited PTO, and more. So, for me, GUL makes more sense.
Here’s an article on key person insurance. It’s pretty much the basics, but a good refresher. -sjm
