Key Person Indemnity: Protecting Your Most Valuable Assets

Profits come from two sources: capital investment and management ability. The physical assets of a business - an efficient plant, up-to-date machinery and sufficient working capital - vitally affect profits. However, materials and money do not generate finished products. Materials and money do not convince a customer that a particular product will best serve the customer’s need. It takes:

1. People with experience, knowledge and special abilities to combine capital, labor and materials to provide finished products;
2. People to sell the products to customers, based on an understanding of the customers’ needs and the competition’s products; and
3. People to manage the many risks associated with the operation of a profitable business.

Are You at Risk? Ask Yourself The Following Questions

• What impact on the business would there be if one of your top people died or became disabled?

• Would you suffer a loss of any customers if one of your key people were no longer there?

• Is there any potential effect on working capital or credit lines if you or another key employee was gone?

• How long would it take to find a replacement for one of your key people? Would there be extra expenses for search or training or mistakes made by a new person?

• Does your bank have your personal guarantee?

We can work with your other financial advisors to help you assess this exposure, and develop a program of key person life insurance and disability insurance to protect your business.