What is one of the most influential factors affecting your dealership’s success? It’s your employees—the people in your organization who are right beside you, helping to build the profit and pursue opportunities for growth. Physical assets—the buildings and equipment—support financial goals, but to carry out the directives necessary to reach those goals, a company won’t get too far without trusted employees.
If you’re like other business owners, you have certain employees whose departure from the company could create genuine setbacks. They’re the ones with the management skills, technical know-how, experience and customer relationships you rely on. How would your dealership handle the void left by a key employee’s death, and the urgent need to find a qualified replacement?
Life insurance is a cost-effective solution to help provide some welcome financial support toward your dealership’s need to replace a key employee. Life insurance can help to:
- keep the business running and growing
- assure creditors that their loans are safe
- assure customers and employees that the business will continue
- recruit, attract and train a replacement
- replace lost profits
- provide time and flexibility for survivors to make necessary business continuation decisions if the key person is you or another owner
In the strictest sense of the word, life insurance insures someone’s life. But, when used as key person protection for your business, it can be thought of as insuring the life of your dealership, too.
There’s no better time than now to start putting a plan in place to protect your company in the event of losing a valuable employee. Ask yourself the following questions:
Who are your key employees?
They are the workers you could describe as your “right hand”; the ones you can’t do without. The people you trust to make the right decisions when you’re not available. They can be at any level or in any position. There currently may be no one who could take over their responsibilities. And remember, you’re a key person too! While it can be uncomfortable to think about your own mortality, focus on those left behind and what they could go through if you haven’t planned for your company’s future.
What responsibilities and talents will have to be replaced?
If an employee has distinctive skills, the loss can be even harder to deal with. That person’s unique talents and expertise mean you need to fill some big shoes. Plan to spend a lot of time and effort finding a replacement.
What will be the cost to replace a key employee?
Don’t forget money. It’s estimated that the cost to replace mid- to high-level employees can range from one to four times their annual salary. Are you prepared to cover that expense out-of-pocket? Few employers have that kind of extra money lying around, “just in case.” Losing an important employee is enough of a disruption to your business. Do you want to add a financial burden on top of that?
The advantages of key person coverage go deeper than just the cash value of a life insurance policy. This type of protection can help smooth the way back to business as usual after your organization loses a vital member. In other words, you and your team gain peace of mind thanks to an added degree of stability and security. And isn’t that “key” to running a great business?
In addition, offering life insurance to your employees can also be a valuable component of your dealership benefits package to attract and retain top job candidates.
To learn more about key person coverage, contact Federated Insurance at 1-888-333-4949, or contact your local Federated representative.
Laramie Sandquist, Federated Mutual Insurance Company
This article contains general information and recommendations regarding risk prevention only, which may help reduce the risk of loss, but are not guaranteed to do so. This information should not be considered legal or other expert advice. Qualified counsel should be sought regarding questions specific to your circumstances. ©2016 Federated Mutual Insurance Company. All rights reserved.