Thursday, February 2, 2012

Addressing an Often-Overlooked Risk

Submitted by Marland Richardson
You try to protect your business against as many risks as possible as you grow and seek to take on bigger projects. But when it comes to key employees who are critical to your company’s success, there might be more risk than you think.
The death or disability of a key employee can reduce the earning power of any business in the short run. For smaller businesses, it can have a more dramatic effect, and even threaten the company’s stability if it happens at the wrong time; especially when dealing with Federal Contracts. This can also be true for other key
contributors such as co-owners or board members.
Addressing these risks with insurance is simple in theory, but determining the right kind of coverage for each key person requires careful analysis, best undertaken with the assistance of a trusted financial professional with specific training in this area.
Having the foresight to protect your business against the loss of a key employee – perhaps a company's most valuable asset – can mean the difference between business as usual and closing up shop. Some important questions need to be faced in order to ensure the business can continue and thrive if the unexpected should occur:
• What value does the key person bring – creative genius, sales acumen leadership qualities? And, what are those characteristics worth to the business?
• How much revenue could be lost before a replacement can take over the role?
• How much will it cost to recruit and train a replacement?
• Will clients lose confidence in the company?
With the help of a trained professional, you can estimate the financial impact on the business of these and other factors, and put in place effective life and disability insurance policies, as well as appropriate legal agreements and/or trusts as needed, to help ensure those costs are covered.
No one wants to imagine the worst. But making a plan for your business to survive is always a good decision.

Richardson is a Financial Advisor with WestPoint Financial Group, a MassMutual Agency. WestPoint has expertise in helping businesses protect the investment they have made in their business through various growth stages. These polices have exclusions and limitations. For costs and complete details of coverage, please call Richardson at 317-469-9999 ext 353 or e-mail

© 2011 Massachusetts Mutual Life Insurance Company. Insurance products issued by Massachusetts Mutual Life Insurance Company, Springfield MA
The information provided is not written or intended as specific tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalties. MassMutual, its employees and representatives are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel.

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