In any business organisation, attrition is a normal occurrence. New employees are welcomed in, just as more seasoned employees leave the company for a better position. However, if you have the good fortune of having employees that are not only good natured but also talented and dedicated, you should take measures to make sure that their stay in your company will be long and fruitful.
Great managers of successful businesses take good care of their key employees. They use to their advantage strategies that encourage the rewarding of key personnel and executives. These rewards include giving incentives or providing them with other benefits. After all, the threat of your key person accepting a better offer with another company and leaving your employ is always looming in the horizon.

Such benefits include executive benefit plans. This allows the company to choose key executives in a discriminating manner and allow them to participate and be rewarded for their valuable service. One may ask how do companies support these benefits. While some make use of the company’s funds by setting aside a budget for it, other companies opt to get a cash value life insurance policy to fund their executive compensation programs.

Cash value life insurance has several advantages when used to fund executive compensation programs. Among these include the possibility that death benefits are tax-free and that cash value has tax deferred growth.

Executive Compensation Plans

There are various types of executive compensation or executive key person insurance plans. The plan that you choose to work best for you will depend on several factors. These factors include how the business is structured, and what the objectives of the business are, its owners and all concerned personnel.

Many financial and business advisors would agree that getting executive key person insurance is a good move for small businesses, or those who are just starting out. Executive key person insurance is a life insurance policy on important people and personnel in a business. This is usually to help protect a business should they suffer the loss of an executive or any key personnel due to disability, serious illness or untimely death. Key executives are people in the company who have significant roles and contributions. With their loss, the company can suffer and possibly lead to it flailing or shutting down.

Executive key insurance helps with this probability. The business is the beneficiary of the policy, and the proceeds can be used by the company to stabilise itself and get back on its feet. The funds can be used in any of the following ways:

• In cases of the business failing or closing, the funds can be used to offer severance packages to the employees without the risk of filing for bankruptcy.
• In cases where the business lost a key executive through attrition, disability or death, the funds can be used for the process of recruiting, hiring and training of a new executive.
• In cases where there is a threat of a key person moving to a different company, the proceeds can be used to fund a counter-offer as well as include bonuses and incentives.

Of course, this all depends on the kind of executive key person insurance policy that the business will choose. This is why it is important for business owners to find the best plan they can use for their company.

Finding the Best Plan

How do you go about finding the best executive key person insurance for your business? Information and advice for key person insurance can be easily gathered these days, thanks to the advancement of technology and the Internet. You don’t have to wait for an appointment to get the information you need for the policy of your choice. Instead you can find out all of this information for yourself, at a time which suits you:

• Check how long each policy runs. In general, executive key person insurance policies and their terms are valid for a year and can be renewed for the succeeding years. Some companies offer executive key person insurance in different time lengths, especially if it is for two or more executives.
• Know how the proceeds are paid out. Most executive key person insurance pay out proceeds either in a lump sum or as a monthly benefit. If these do not fall within your needs, look for a company that is flexible in changing their payout schedules and frequencies.
• Know what you need executive key person insurance for and why. You need to identify the people in your organisation who play a key role in the business operations. Evaluate their contribution and try to see if the business will survive in their absence, and for how long. Knowing this will give you a clearer idea of who needs to be covered by executive key person insurance. It will also allow you to properly choose what kind of coverage you need to get.
• Examine the conditions of your policy. Executive key person insurance offers a general protection for a business, but the terms and conditions can make or break the policy that you get. It is not nice to get a package then realise later on it is not what you need. Think of all the scenarios that can crop up with the loss of a key executive, and ask if those are covered. It is better to cover all bases now, than worry about it later.

Executive key person insurance may seem costly at first glance, but preparing for any kind of emergency is not something a business should be a cheapskate about. Getting an executive key person insurance policy will not only ensure that the business is safe from potential disaster, it will also give everyone involved peace of mind that their jobs are all taken care of.