It has long been understood that the value of a key employee drastically affects the profit margins of a company when that person is away. To take care of the losses that are likely to be incurred by the disability of a key employee, some companies have arranged for what is known as Key person disability insurance. This cover does not aim at pouring back the profits lost as a result of the disability encountered by a key employee. It remedies the problem by spearheading measures which are aimed at keeping the company operating normally. In other words, the cover is there to make sure that the company’s operations are not affected by the absence of the key person.
Key person disability insurance is designed in such a way that when the key employee has been injured, the benefits from this policy will be used to find a replacement. This can therefore be looked at in two ways. If the disability is temporary, the funds can be used to hire another individual to handle the responsibilities handled by that person until he comes back. This insurance cover will take care of all the logistics involved in the hiring process and in making sure that the replacement is acquired as soon as possible. Key person disability insurance also takes into consideration the fact that the person to be hired might have some effect on the returns of the company before settling in completely. In other works, some loss of income can be inevitable in some cases and may therefore need to be brought to light in order to determine the amount of benefits to be paid.
The same Key person disability insurance can be used to handle a situation where the key person has suffered a permanent disability and will never be able to return to work at any point in time. When this happens, the insurance policy will be in a position to see to it that a permanent replacement is sourced. In the process of finding a permanent solution to this setback, an individual might be able to go through a set of interviews to determine the fitness � as per company policy. At this point key person disability insurance becomes useful in taking care of all the expenses that will be used to make sure that the right person for a permanent position on the job is found. The insurance experts always advice that paying premiums for such policies are not rushed into, until you are sure of the returns that are bound to come your way. This means that, a company needs to take time to look at the benefits that will come fourth by carrying out some calculations. The experts can do that part once consulted.
The starting point for buying any key person disability insurance is supposed to start with an assessment of the impact the worker might have on the company. Otherwise, it is possible to find cases where there is a wrong categorization of the key-employee. Once the key employees have been identified, then the right insurance company can be brought on board to take care of the rest.
