Why insuring principal employees and owners may keep your business operating.

• Author: Anderson, Tom
• Position: INSURANCE

Envision a scenario that's all too real in Alaska. You're a company owner; you have several partners. Your owner group manages the business cohesively and all of you are integral to operations and revenue generation. Corporate vitality is thriving and profit is a reality.

Now let's darken the picture a bit. Consider the Alaska expanse and your business services involving travel to remote, rural work sites with inclement weather. Mix diverse geography, flight limitations, and less than desired meteorology together, and suddenly this hypothetical is not only possible but also probable.

Here comes the worst part of the story that isn't common but remains an unnerving outcome: one of your business partners

or a valuable employee has to travel into the harsh environment described and succumbs to an early demise in a plane wreck.

Now you have one less business partner or staff member in the company. The loss is devastating. Beyond the absence of revenue-generation and work performance by the deceased co-owner, into your offices walks an entitled spouse, offspring, or distant relative sniffing for assets or ownership and stock value.

Without certain kinds of business life insurance like key person coverage or an insured buy-sell agreement on the partner who died, our fictitious business may have serious problems and be forced to liquidate or even close shop.

Keep Your Business Operating Through Good Times and Bad

The story of a business losing a partner or critical employee can be sad, but it doesn't have to be tragic in terms of business continuity.

Losing an employee with special expertise or knowledge can clearly affect a company's bottom line and operations, says Charles Villarreal, Alaska's New York Life Insurance Company managing partner.

The easiest fix to avoid harm to one's business upon the loss of personnel is to meet with an insurance agent who specializes in business coverage. Key person coverage is life insurance on a "key" employee, proprietor, or partner integral to ongoing operations of a business, explains Villarreal, who has been with New York Life Insurance for more than ten years. This special insurance is purchased by the company and can cover essential owners, employees, or board members. If the insured person dies, the company is the beneficiary.

Villarreal notes that it is not uncommon for family members to inquire as to assets owned by the deceased and the process through which to secure what is owed to the estate. The...