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Key employee life insurance

Key employee life insurance, also called key employee valuation, helps protect the most important asset a business has—its key employees.

For full details about employee insurance, please contact your Desjardins Agent.

How key employee life insurance can help

Key employees have many distinguishable characteristics, notably:

  • They have specialized skills that are critical to the success of the business.
  • They have a significant client base that might leave the business if they were to die.

When a key employee dies, the business needs cash to:

  • Cover the expense of finding, recruiting and training a new employee.
  • Continue long-term development programs which may be jeopardized by the death of the key employee.
  • Reassure creditors and customers the business will continue.

There are two primary key employee valuation methods to determine how much employee insurance is needed:

  • Estimate the cost of finding, recruiting and training a replacement. These costs would include employment agency fees, moving expenses and time spent interviewing and training the replacement.
  • Determine the amount of profit brought to the business each year by the key employee and how many years it would take for a replacement employee to perform at the same level of competence.

The annual premium cost of key employee life insurance is often a small fraction of the death benefit, which is generally received tax-free.

The products described here are manufactured and issued by Desjardins Financial Security Life Assurance Company.

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