CONSTRUCTION RISK – Why You Need ‘Key Man’ Insurance – April 2020


IF YOU are operating a small business, you are likely relying on a small staff to get the job done. Many employees in small firms have to wear many hats and if one of them or an owner should die, the business could suffer greatly from that sudden loss of talent. If you don’t have “key man” insurance, that setback could be devastating to the viability of your operations, whereas coverage would provide you with extra funding that you would need while recovering from the loss. Keyman insurance is life insurance on a key person or persons in a business. In a small business, this is usually the owner, a founder or perhaps a few vital employees. These are the people who are crucial to a business – the ones whose absence would sink the company. You need key man insurance on those people.

Key man insurance basics

Before buying coverage, give some thought to the effects on your company of possibly losing certain partners or employees. In opting for this type of coverage, your company would take out life insurance on the key individuals, pay the premiums and designate itself as the beneficiary of the policy. If that person unexpectedly dies, your company receives the claim payout. This payout would essentially allow your business to stay afloat as you recover from the sudden loss of that employee or partner, without whom it would be difficult to keep the business operating in the short term.

Your company can use the insurance proceeds for expenses until it can find a replacement person, or, if necessary, pay off debts, distribute money to investors, pay severance to employees and close the business down in an orderly manner. In other words, in the aftermath of this tragedy, the insurance would give you more options than immediate bankruptcy.

Determining whom to cover

Ask yourself: Who is irreplaceable in the short term? In many small businesses, it is the founder who holds the company together – he or she may keep the books, manage the employees, handle the key customers, and so on. If that person is gone, the business pretty much stops.

Determining amount of coverage

• The amount of coverage depends on your business and revenue.
• Think of how much money your business would need to survive until it could replace the key person, come up to speed and get the business back on its feet.
• Buy a policy that fits into your budget and will address your short-term cash needs in case of tragedy.
• Ask us to get some quotes from different insurers. • Check rates for different levels of coverage ($100,000, $500,000, etc.)

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Coronavirus – Mindful Insurance Remote Work Arrangements

At Mindful Insurance Solutions, our top priority has always been to deliver best-in-class service to our clients.  We chose the name “Mindful” precisely to be “present and willing to do something” with our clients, and that’s what we always strive to be—present with you in your business.

To ensure that we remain true to our name during the current coronavirus pandemic, we are taking every precaution possible to protect the health and safety of our team and their families.

Therefore, in line with much of the rest of the country, as of today, our team will work remotely, and our physical office locations will be closed.

For now, our plan is to maintain remote work arrangements for as long as local authorities require or medical experts advise.  We will closely monitor the situation to determine when we can return to our normal office procedures. The good news is that our technological capability enables everyone on our team to work seamlessly from remote locations. During this period, we will continue to be readily accessible to you. Your emails and phone calls/voicemails will be answered as per usual, and our Mindful Insurance professionals will work to meet your needs in all the ways you have come to expect from us.

We understand that insurance is a people-oriented industry, and Mindful prides itself on being a people-oriented company.  But while there is no substitute for face-to-face interaction, it is prudent to curtail such interaction as much as possible until things return to normal.  Therefore, Mindful also stands ready to interact with you via remote video/teleconferencing as desired.

These extraordinary steps are necessary to preserve the health of our team and to help curtail the spread of the virus, while upholding our commitment to you, our clients.  On behalf of the entire Mindful team, I want to thank you for your understanding and support during these challenging times.  We wish you, your families and your teams much good health.

In your service, stay healthy and safe,

William Donaldson President / CEO


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