The success of a business may hinge on ideas and leadership provided by a key executive. The sudden death of such an executive may have a severe economic impact on the business because it loses that person’s unique skill, abilities, and relationships. It also has the potential to weaken a company’s credit rating. As a result, the business may have to spend considerable amounts of money to recruit or train a replacement executive.

A strategy that includes key person life insurance can help during the transition period following the death of a key executive. Through the purchase of life insurance on that key person, the business can financially protect itself: The death benefit can provide the necessary liquidity to not only find a suitable replacement but it can also be used to help prevent a disruption in sales or production. If a cash value policy is used, a business may access the cash value for emergencies or other financial needs.

These plans can help buy your company time to continue operating while making sudden but unavoidable upper-level management changes.