Overcome a vital loss with key employee insurance
Every business has assets that are protected against loss, whether they are buildings, office equipment or automobiles. Key employee life insurance, also called key employee valuation, helps protect the most important asset the business has—its key employees.
For more information, contact your Desjardins Agent. They can help you choose an employee insurance program that will meet your objectives.
The importance of key employees
Key employees have several characteristics that distinguish them from other employees, including:
- Having specialized skills that are critical to the success of the business.
- Having a significant client base that might leave the business if the employee were to die.
What happens in the event of a death
When a key employee dies, the business needs cash:
- To cover the expense of finding, attracting and training a new employee.
- To continue the long-range development programs jeopardized by the death of the key employee.
- To assure creditors and customers the business will continue.
How much employee insurance do you need?
There are two primary methods of key employee valuation to determine how much employee insurance is needed:
- Estimate the cost of finding, hiring and training a replacement. These costs would include employment agency fees, moving expenses and the owner's time spent interviewing and training the replacement.
- Determine the dollar amount of profit brought to the business each year by the employee and how many years it would take for a replacement employee to perform at the same level of competence.
To be certain the cash will be available when it is needed, consider purchasing life insurance.
The annual premium cost is often a small fraction of the death benefit, which is generally received free of income tax.
Life insurance products are manufactured and issued by Desjardins Financial Security Life Assurance Company.