entrepreneurship, key man insurance, protection, risk management

Protecting your business, and your legacy

Most business owners, CEOs and executives are laser focused on driving their business or enterprise towards success. They are responsible for preserving and expanding sales and revenue. They are responsible for hiring and firing. They are responsible to investors and stakeholders to manage risk and ensure success. They handle client relationships, research and development, marketing and IT… As leaders they wear many hats and carry a lot of weight on their shoulders.

But what happens when a CEO or leader within a company passes away? What is the impact on the business and the employees who depend on that business for their livelihood?

In a recent conversation with a venture capital investor she shared her story of how a company she had invested millions of dollars into recently had their CEO die of a heart attack. As a result, company activity ground to a halt. Sales dried up and company savings was depleted. As she struggled to find a suitable replacement for the CEO, the investor was forced to step in and try to fill the gap. The problem is she did not have the CEO’s background or skill set. The investor had to make a choice between investing more money to keep the enterprise afloat or close the doors, lose her investment and layoff the employees.

I asked her if she had Key Man insurance in place. She sadly answered “No…”

This happens every day…

What is Key Man insurance? It is life insurance which a company takes out on company leaders or key executives for creating a cash buffer for the company if the leader or exec dies. This cash buffer can be used to facilitate the search for a replacement. It can soften the loss of revenues if a key producer dies giving the organization time to adjust. It can protect the investment investors have made in a company reducing their risk of loss.

Losing a coworker or company leader can be traumatic. Running a business carries a huge amount of stress and because so many are depending on a few key people it is critical to ensure there is as little disruption as possible if a CEO or key executive dies. Leaders can protect their legacy and the people who depend upon them.

If you have questions about Key Man insurance or other strategies to protect and reduce risk, please contact me at james.cox@glic.com.

Retirement Income. Tax Efficient Planning.

Life Insurance. Disability Insurance

Socially Responsible Investing

To learn more contact:

James Cox

Cell: 267 323 6936

Email: james.cox@glic.com

Park Avenue Securities 150 South Warner Rd.  Suite 120 King of Prussia, PA 19406

This material contains the current opinions of the author but not necessarily those of Guardian or its subsidiaries and such opinions are subject to change without notice.

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Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). OSJ: 150 S. Warner Road, Suite 120, King of Prussia, PA 19406 (610)293-8300.  Securities products and advisory services offered through PAS, member FINRA, SIPC.  PAS is a wholly owned subsidiary of Guardian.

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