Business Continuation Insurance

Business continuation insurance protects your company from financial loss caused by the death or the long-term disability of a key employee.

Should you have it?

Yes, if you have a major financial interest in a company that could be jeopardized by the death or disability of a partner or other key employee. There are essentially four types of business continuation insurance:

• Business overhead expense (BOE) insurance - This is a special form of disability insurance that provides a means of paying your company's overhead expenses, such as rent and utilities, during the time that you're disabled.
• Key person disability insurance - This type of insurance protects your business in the event that you (or any partners) are unable to perform critical contributions required for the success of the firm.
• Key person life insurance - This provides funds to surviving owners of your business to pay for losses incurred by the death of a key employee or partner. Examples might include the need to hire temporary help or consultants or to train a new employee. Proceeds from key person life insurance can also be used with a buy and sell agreement to help you, the surviving owner, purchase the stock of the deceased without selling assets of the firm.
• Life insurance and disability insurance to fund a buy-sell agreement - Provides the liquidity needed in the event of death or a long-term disability. The buy out can be with business partners, family members, key employees or even a competitor.