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Business Insurance in the Event of a Death or Disability

Posted by David Ross on Thu, Sep 17, 2015

Do you know your business insurance needs in the event of death or disability? We're a PA business insurance agency who can help. Serving Reading, Philadelphia, Lancaster, Harrisburg, York, Allentown, Lehigh Valley, Pittsburgh, Erie, PA and beyond.When you start a business, you’re full of hope and dreams. The last thing you want to think about is what would happen to your business if you, a co-owner, or a key person within the business were to become disabled or – God forbid – die.

But, as a business owner it is your responsibility to think about these things and plan how you will protect your business, your employees, and your family in the event of one of these tragedies. In order to do that, you need to ask yourself these two questions and then get the proper business insurance to meet your needs:

What will happen to my business and family if I die or become disabled?
What will happen if certain key employees die or become permanently disabled? 

Here are 4 Types of Business Insurance to Consider:

Disability Buy-Out Insurance

You may think that if something were to happen to you that your family could jump in and run the business or hire someone to handle the day-to-day management of your business. Unfortunately, that rarely happens. Usually, they don’t have the skills or the where-with-all to make that happen. So, it’s important to create a buy-sell agreement - a contract that would allow remaining owner or owners to buy a deceased, disabled, or retired owner’s share of the business (at a pre-determined agreed upon price). A properly structured and funded buy-sell agreement will ensure that your business partners know exactly what needs to be done and that your family is fairly and promptly compensated.

There are several ways to fund this type of agreement in the event of such a tragedy. You (or your remaining partners) can use cash (assuming you have access to enough cash), pay in installments from current earnings (which could become a financial burden to the business for years to come), take out a loan (assuming you could obtain a business loan after an owner’s death or disability), or use disability buy-out insurance (the only way to guarantee that the cash will be available when needed).

Business Overhead Insurance

If an owner were to become disabled, this insurance would reimburse the business for overhead expenses – such as salaries, taxes, employee benefits, rent, mortgage, utilities, etc. – for one or two years. This often means the difference between a business surviving or closing until the owner can get back on his or her feet.

Individual Life Insurance

What if you or one of the owners were to die? What would happen to your business? You might assume that your family or remaining owners could sell or liquidate the business to ensure their financial security. Unfortunately, this doesn’t usually work. First, who wants to think about selling a business while grieving for the loss of a loved one? Second, when the family is forced to sell the business quickly, they may have to sell at a discount or during market conditions that make the business less attractive. In other cases, the business may be worth very little without the proprietor or partner. Individual life insurance can protect your family by providing funds to cover debts, ongoing living expenses and future plans, in the event that something happens to you. Life insurance can also be structured to fund a buy-sell agreement.

Key Person Insurance

This is another essential component of a smart business continuation plan. Key person insurance is life or disability insurance purchased by the business on an employee/owner that is essential to the running of the business. It is payable to the business. When a key person dies or becomes disabled, insurance can help make up for lost sales or earnings or cover the cost of finding or training a replacement.

Need Help Finding the Right Business Insurance?

Contact us for help in finding the best PA commercial insurance for your business in Philadelphia, Reading, York, Lancaster, Lebanon, Harrisburg, Allentown, Lehigh Valley, Pittsburgh, Erie, PA and beyond.Don’t take chances. It’s your responsibility for protecting your family, employees, and your business. Make sure that you plan for the unexpected with the right business insurance and individual life insurance.

Contact us at (800) 947-1270 or (610) 775-3848; we can help you determine the right insurance to protect your assets. As independent insurance agents, we'll shop among competing insurance providers to find you the right insurance at the best price. Call or click today.

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Key Person Life Insurance and Million Dollar Legs

Posted by David Ross on Thu, Feb 06, 2014

What do Legs Have to do with Key Person Life Insurance?

WLearn why key person insurance may be right for your business. We insure large and small businesses in PA, including Reading, Philadelphia, Harrisburg, Erie, Lancaster, Allentown, Hershey, York and beyond. Call for the best advice on key person life insurance.e’ve all heard stories about celebrities insuring various body parts for ridiculous sums of money - most famously, Betty Grable’s legs were insured for a million dollars. Why would anyone insure such a thing? The fact of the matter is, her studio made a lot of money off of Betty Grable’s appearances, and a large part of her appeal were her fabulous gams. If her legs had been marred in any way, her ability to sell movies and posters would’ve been greatly reduced.   

Now, think about this.  Are there any parts – such as key person - of your business that, if lost, would significantly impact your bottom line?

Who is a Key Person?

A key person in your company is like Betty Grable’s legs. That person could be one of your executives, your best salesperson, your gem of an office manager who keeps things running smoothly, or an old hand who knows where all the skeletons are buried (figuratively, of course!). A key person is any employee who, if he/she suddenly passed away or became unable to work, would cause your business to struggle. Look around your office – who couldn’t your business afford to lose?

The Vulnerability of Small Businesses and the Need for Key Person Insurance

Getting Key Person Life Insurance is especially vital for small businesses, both because they generally have a thinner line between success and failure, and because they have smaller workforces. A giant firm with offices all over the country may not have any employees who are irreplaceable; since they are all tiny cogs in a giant machine with many redundancies, while a small company with only a few employees has less overlap in responsibilities.

With a small workforce, employees often have unique and specialized knowledge and connections that may not be easily replaced. Also, for businesses just starting out, if one of the partners has an accident, the poor fledgling company would be doomed to fail unless there was some kind of cushion. That cushion could be a Key Person Life Insurance policy.

Grieve without the Worry

Of course, the loss of any employee’s life - regardless of how essential they were to your business - is an awful thing to contemplate. A Key Person Life Insurance policy can allow you to grieve, without the worry of how you’re going to be able to keep the company afloat until you find or train a replacement.

Is Key Person Life Insurance Right for Your Business?

Is key person insurance right for your business? Call us for answers.If you have people who are as valuable to your business as Betty Grable’s legs were to her, contact American Insuring Group at (610) 775-3848 or (800) 947-1270 for information on Key Person Life Insurance policies for your business!

Contact us to learn more about Key Person Insurance. We serve Philadelphia, Reading, Lancaster, Allentown, Harrisburg, Pittsburgh, Erie, Scranton, and all of Pennsylvania and beyond with quality business insurance at affordable prices.

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Business Insurance to Attract Employees and Protect Your Business

Posted by David Ross on Thu, Nov 14, 2013

Business Insurance that Attracts & Retains Employees

Business insurance to attract and retain employees and to protect your business, from key person insurance to insurance for better employee benefits. Available from American Insuring Group, serving Reading, PA, Allentown, Philadelphia, Harrisburg, York, Lancaster, Erie, Pittsburgh, PA and beyond for over 25 years.Great employees can be the fuel to move your business ahead of the competition. Dedicated employees add more and more value over time as they gain increased knowledge and experience. While everyone likes a company that offers great benefits, the best employees and job candidates are likely to view the quality of the benefits you offer as a compelling reason to join, remain at, or leave your firm.

With today's cost of purchasing individual insurance, employees are likely to view well-designed employer insurance packages as a deciding factor in selecting one company over another. Furthermore, strong benefits packages help retain your best employees, reducing the high cost of employee turnover.

Designing an Attractive Employee Benefits Package

That's why smart business owners create attractive employee benefits packages that not only include health insurance, but often life insurance, extended disability insurance, dental insurance, and generous retirement plans, among other options. Executive compensation packages may also include deferred compensation plans and higher levels of insurance coverage to retain your best talent. It pays to be well informed on the range of insurance options available to your business.  Your independent insurance agent can be a key resource to help you craft an employee benefits package that attracts better employees at a price you can afford.

 

Commercial Insurance to Protect Your Business in Ways You May Not Have Considered

General liability insurance, property insurance, vehicle insurance, and workers' compensation insurance form the foundation of your business insurance protection. However, there are other types or subcategories of commercial insurance to consider. Among these are key person insurance, individual insurance, and insurance-backed buy-sell agreements.

Key Person Insurance: Thinking Beyond Job Titles Alone

Key person insurance, also known as key man insurance, is designed to reimburse you for the loss of sales or earnings due to losing an executive, business partner, or other key employee due to disability or death. When considering key person insurance, think beyond titles and identify those employees in your organization who, if unavailable, would dramatically impact your sales or the continuity of your business operations.

These may include high-performing sales reps and customer service personnel, as well as employees with deep technical knowledge of your industry or complex internal processes. Such people may be very difficult to replace with someone of similar knowledge or talent, resulting in reduced productivity or lost sales revenues for your firm for years to come. Your independent insurance agent can help you put together a smart key person insurance package to protect your business financially from the impact of losing a key employee. 

Backing Buy-Sell Agreements with Business Insurance Protection

In the excitement of starting a new business with your business partner, business owners often overlook the need to work out all the details of a buy-sell agreement that comes into effect as a result of the loss of the other business partner due to retirement, death, or disability. While an attorney may be invaluable in putting together such agreements, don't neglect the need to obtain the proper life insurance on each partner to carry the remaining partner through the transition period and to keep the business financially healthy. The insurance coverage should be sufficient to buy out the departing partner's share of the business due to any of the circumstances mentioned above.

Life Insurance for Business Owners: Obtaining the Right Amount of Coverage

Business owners should carefully determine the amount of personal life insurance protection needed. Unlike employees, owners often have significant personal assets tied up in the business, such as a second mortgage that may have been used to finance the business. If the surviving family members' income drops significantly due to the death of the business owner, the results can be disastrous not only for the family, but for employees as well, even if significant personal loans and assets have not been invested in the business.

Low levels of life insurance may threaten not only the entire business, but also the careers of all employees by potentially forcing the surviving family members to liquidate or sell the business to pay the personal debts of the deceased business owner, or simply to provide the income needed to keep up with day-to-day financial obligations.

We Can Help with All Your Business Insurance Needs

We can help you make sense of your many business insurance options, from key person insurance, to life insurance, health insurance, disability insurance, dental insurance, and other forms of personal and commercial insurance to protect your business, and to attract and retain employees. We serve businesses in Reading, PA, Philadelphia, Allentown, Harrisburg, Lancaster, Lebanon, State College, Pittsburgh, Erie and points in between and beyond. 

Contact us

(800) 947-1270 or (610) 775-3848 

Take the challenge - get a quote. We offer the best insurance protection at the best price.

Take the challenge. Get a business insurance quote.

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