Key Employee Insurance

Key Employee Insurance

The untimely death of a key employee or a business owner who is also a key employee can have a disastrous effect on a business. Some of the “costs” of such an event might include the following:

  • The financial cost (in time and dollars) to find, hire, and train replacement.
  • The distraction of other employees, resulting in deadlines not met, deteriorating morale, or a higher level of personality conflicts.
  • A need for cash to fulfill promises made to the deceased employee’s spouse or family, such as salary continuation or deferred compensation.
  • The inability to seize a business opportunity because cash reserves are being used to recruit and train a new employee.
  • A loss of confidence among both suppliers and customers.

Some additional problems may exist if the employee is an owner which might include the following:

  • Disagreements may arise between the surviving business owner and the heirs of the deceased employee.
  • Lack of cash to buy the interest of a deceased owner, requiring the sale of the business to an unknown third party.
  • Surviving owners may be forced to work with someone who is either not competent or not motivated enough to make the business thrive.
  • The business may have to be sold to pay estate taxes.
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Bedrosian & Associates

Address: 525 Veterans Blvd., Suite 102 Redwood City, CA 94063

Phone: (650) 367-0259 Fax: (650) 367-0599

Ron Bedrosian License #0478051

Ryan Bedrosian License #0F00667

Alex Bedrosian License #0G33562