HOW TO INSURE KEY PERSONS
National Edition

• Learn the Coverage.
• Find the Prospect.
• Build the Account.

Every business has employees.
But some businesses have people they simply cannot afford to lose.

• The founder who knows every major customer.
• The salesperson responsible for 40% of revenue.
• The technician with specialized knowledge nobody else possesses.
• The executive who runs day-to-day operations.
• The chef everyone comes to the restaurant to see.
• The estimator who wins the contractor's biggest jobs.
• The physician responsible for a major portion of a practice's production.

The question isn't:

• “IS THIS PERSON IMPORTANT?”

The real question is:

• “WHAT HAPPENS TO THE BUSINESS IF THIS PERSON DOESN'T COME TO WORK TOMORROW?”

That's the key-person conversation.

KEY DOESN'T NECESSARILY MEAN OWNER
This is one of the most important lessons in the guide.
A business owner may be a key person.
But so may an employee.
A producer who looks only at ownership may completely miss the exposure.
The key person could be:

• Founder
• President
• Sales manager
• Top producer
• Engineer
• Technician
• Project manager
• Estimator
• Physician
• Attorney
• Accountant
• Designer
• Chef
• Operations manager
• Relationship manager

The title isn't what makes someone key.
THE ECONOMIC DEPENDENCE DOES.

WHAT YOU'LL LEARN
This practical producer guide helps you work through issues involving:

• Identifying key persons
• Economic impact
• Revenue dependence
• Customer relationships
• Specialized knowledge
• Replacement costs
• Recruitment
• Training time
• Business disruption
• Debt and lender concerns
• Ownership versus employee exposures
• Policy ownership
• Beneficiary considerations
• Coverage amount discussions
• Underwriting
• Existing coverage
• Documentation
• Professional boundaries
• Annual reviews
• Cross-selling
• Prospecting
• Centers of influence

The objective is to help producers recognize when a company may have a people dependency that deserves an insurance conversation.

WHO IS THIS GUIDE FOR?
Especially useful for:

• Life & Health producers
• Commercial Lines producers
• P&C producers expanding into Life
• Multi-line agencies
• Agency owners
• Producers serving small and midsize businesses
• Producers developing commercial niches
• Agents conducting commercial renewals
• Producers looking for opportunities inside existing accounts

If you already write Commercial Lines, you probably already insure companies with key-person exposures.
The question is whether anyone has asked about them.

THE $2 MILLION COMPANY WITH ONE SALESPERSON
Imagine a business with $2 million in annual revenue.
One salesperson produces $800,000 of it.
That person dies unexpectedly.

• What happens?
• Customers may leave.
• Competitors may call those accounts.
• Revenue may fall.
• Management may spend months recruiting a replacement.
• The replacement may need months more to build relationships.
• Meanwhile, expenses continue.

The exposure isn't simply:

• “We lost an employee.”

It's:

• “WE LOST PART OF THE COMPANY'S ABILITY TO PRODUCE REVENUE.”

That's what the producer needs to uncover.

THE PERSON WHO KNOWS EVERYTHING
Some companies have an employee who has been there for 25 years.
That person knows:

• Every customer.
• Every supplier.
• Every process.
• Every shortcut.
• Every problem.
• Every workaround.

Much of that knowledge may never have been written down.
Ask:

• “If that person were suddenly gone, how long would it take the company to recover what they know?”

That's a key-person question.

CUSTOMER RELATIONSHIPS CAN BE AN ASSET
Sometimes customers aren't loyal primarily to the company.
They're loyal to:

• A salesperson.
• An account manager.
• A professional.
• A founder.
• A technician.
• A relationship.

If that person disappears, customers may follow.
The producer should ask:

• “Which person in this company would cause customers to become nervous if they left tomorrow?”

The answer may identify the exposure immediately.

REPLACEMENT COST IS MORE THAN SALARY
A business owner may say:

• “She only earns $90,000. We can replace her.”

Maybe.
But replacement may involve:

• Recruiting costs
• Search fees
• Temporary help
• Lost production
• Training
• Overtime
• Customer disruption
• Management time
• Lost opportunities
• Reduced revenue

Salary alone may not measure the economic loss.

LENDERS MAY CARE TOO

• A lender may extend credit partly because of confidence in particular owners or executives.
• If a critical person dies, that confidence may change.
• The producer should never assume a lender requires key-person coverage.

But the producer can ask:

• “Are there any insurance requirements connected to the company's financing?”

Then verify.

WHO OWNS THE POLICY?
Key-person coverage requires careful attention to:

• Insured
• Owner
• Beneficiary
• Purpose
• Employer/employee considerations
• Applicable consent and notice requirements
• Tax and legal considerations

The producer should stay within licensing and professional boundaries.
When legal or tax questions arise:
BRING IN THE APPROPRIATE PROFESSIONAL.
Knowing when not to answer is part of professional insurance practice.

HOW MUCH COVERAGE?
There isn't one universal formula.
Possible considerations may include:

• Revenue contribution
• Profit contribution
• Replacement cost
• Recruitment expense
• Training period
• Business debt
• Expected disruption
• Customer relationships
• Financial obligations

The producer's job is to gather information and work within carrier, underwriting, and professional guidance.
DON'T PULL A NUMBER OUT OF THE AIR.

EXISTING KEY-PERSON COVERAGE NEEDS REVIEWS
Suppose coverage was purchased eight years ago.
Since then:

• Revenue doubled.
• The employee became more important.
• Debt increased.
• The business expanded.
• Compensation changed.
• Or perhaps the person isn't key anymore.

Coverage should reflect today's exposure—not yesterday's organization chart.

NOW LET'S FIND THE PROSPECT
This may be one of the easiest Life opportunities to uncover inside a Commercial Lines book.
Why?
Because the P&C producer already knows something about the business.

• Employees.
• Operations.
• Revenue.
• Vehicles.
• Locations.
• Payroll.
• Management.

START THERE.

PROSPECTING TRIGGER #1
THE COMMERCIAL RENEWAL
During the renewal review, ask:

• “Who are the two or three people this business would have the hardest time replacing?”

Then stop talking.
The answer may open the entire conversation.

PROSPECTING TRIGGER #2
THE OWNER SAYS:

• “I DON'T KNOW WHAT I'D DO WITHOUT HER.”

Don't let that sentence pass.
Ask:

• “What would happen to the business if you actually had to operate without her?”

The owner just identified a possible key person for you.

PROSPECTING TRIGGER #3
ONE PERSON PRODUCES A LARGE SHARE OF REVENUE

• Salespeople.
• Professionals.
• Producers.
• Rainmakers.

If revenue is concentrated around one individual, ask what happens if that production disappears.

PROSPECTING TRIGGER #4
SPECIALIZED SKILLS
Some employees can't be replaced with a classified advertisement next Monday.
Think:

• Engineers.
• Technicians.
• Specialists.
• Licensed professionals.
• Project managers.
• Craftspeople.
• Experienced operators.

Ask:

• “How long would it realistically take to recruit and train someone who could do this person's job?”

PROSPECTING TRIGGER #5
RAPID GROWTH
As a business grows, individual people can become increasingly important.

• The founder delegates.
• A sales manager takes over relationships.
• A superintendent manages operations.
• A CFO handles finances.

Yesterday's ordinary employee can become today's key person.
GROWTH CHANGES PEOPLE EXPOSURES.

​​PROSPECTING TRIGGER #6
NEW FINANCING

• The business takes on debt.
• The lender believes the company can repay it.

But what happens if a person essential to that repayment disappears?
Financing can be a natural trigger for reviewing key-person exposures.

THE BEST QUESTION MAY BE RIDICULOUSLY SIMPLE
Ask a business owner:

• “WHO CAN'T YOU AFFORD TO LOSE?”

You'll sometimes get the answer immediately.
Then ask:

• “Why?”

Now you're discovering the exposure.

• Revenue?
• Relationships?
• Knowledge?
• Leadership?
• Production?
• Operations?

That's the conversation.

BUILD A KEY-PERSON PROSPECT LIST FROM YOUR COMMERCIAL BOOK
Look for businesses with:

• Multiple employees
• High revenue per employee
• Specialized operations
• Professional services
• Strong sales organizations
• Specialized licenses
• Large customer relationships
• Rapid growth
• Significant debt
• Founders still heavily involved
• One dominant salesperson
• One dominant technical employee

Choose 20 appropriate accounts.
Then review them.
YOU DON'T NEED 1,000 COLD LEADS.
You need 20 good conversations.

NICHE PROSPECTING MAKES THIS EVEN STRONGER
Suppose you specialize in contractors.
Create content around:

• “What Happens to a Contracting Business When Its Best Estimator Is Suddenly Gone?”

Target professional offices?
Try:

• “What Happens When One Professional Produces 40% of the Firm's Revenue?”

Manufacturers?

• “Could Your Operation Continue Without the Person Who Knows the Production Process Best?”

You're no longer advertising generic life insurance.
YOU'RE TALKING ABOUT THEIR BUSINESS.
That's powerful prospecting.

CENTERS OF INFLUENCE
Potential referral relationships may include:

• CPAs
• Attorneys
• Bankers
• Business consultants
• Commercial lenders
• Financial professionals
• Payroll professionals

Instead of saying:

• “Send me people who need life insurance.”

Demonstrate that you understand business continuity and know your professional boundaries.
That makes you easier to refer.

EDUCATIONAL MARKETING
Business owners may search or respond to questions such as:

• What is key-person life insurance?
• Does my company need key-person insurance?
• How much key-person coverage should a business have?
• Can a business insure an employee?
• What happens if my top salesperson dies?
• Who owns a key-person policy?

Each question can become:

• Website content
• Google Business Profile content
• Facebook content
• YouTube videos
• Email campaigns
• Business newsletters
• Chamber presentations
• Commercial-client education

ANSWER THE QUESTION.
Then offer the review..

​A 30-DAY KEY-PERSON PROSPECTING PLAN

WEEK 1 — IDENTIFY 20 COMMERCIAL ACCOUNTS

• Choose businesses likely to depend heavily upon particular people.

WEEK 2 — ASK ONE QUESTION
During an appropriate conversation:

• “Who are the people this company would have the hardest time replacing?”

Document the answer.

WEEK 3 — EDUCATE
Publish:

• “WHO CAN'T YOUR BUSINESS AFFORD TO LOSE?”

Explain the exposure without turning the content into a sales pitch.

WEEK 4 — FOLLOW UP
Track:

• Key people identified
• Reviews scheduled
• Financial information needed
• Existing coverage
• Quotes
• Applications
• Advisor involvement
• Future review dates

Then select another group.

ONE KEY-PERSON CONVERSATION MAY REVEAL MUCH MORE
The owner tells you there are two indispensable people:

• The owner.
• And the sales manager.

Now you may uncover:

• Key-person insurance
• Business-owner life insurance
• Buy-sell planning
• Debt protection
• Disability income
• Small-group health insurance
• Commercial insurance opportunities

That's why the objective isn't merely to sell one policy.
UNDERSTAND THE BUSINESS.

REAL-WORLD PRODUCER THINKING
The guide includes practical situations requiring the producer to work through:

• HEAR →
• ASK →
• VERIFY →
• DOCUMENT →
• NEXT SAFE ACTION

That includes knowing when to:

• Ask more questions.
• Verify business information.
• Review existing coverage.
• Contact underwriting.
• Bring in another professional.
• Document assumptions.

Or postpone a recommendation until additional facts are available.

PRACTICAL PRODUCER TOOLS
Use the guide for:

• Key-person discovery
• Commercial renewal discussions
• Revenue-dependency conversations
• Replacement-cost analysis
• Existing-policy reviews
• Business-owner meetings
• Cross-selling
• Prospecting
• Centers-of-influence development
• Educational marketing
• Producer training
• Scenario exercises

WHAT COULD ONE KEY-PERSON CASE BE WORTH?
The guide costs: $25.

• One conversation could repay it.
• One application could repay it many times over.
• One commercial client may have several key people.
• One business-owner conversation may uncover additional Life & Health needs.

And the guide remains available for every commercial account you review.
$25 — BUY IT ONCE. USE IT FROM NOW ON.
CLICK HERE TO BUY — ONLY $25

WANT MORE BUSINESSES TO HAVE THIS CONVERSATION WITH?

• Knowing how to identify the exposure is Step One.
• Getting in front of more business owners is Step Two.

FYI Express+ can help agencies build educational marketing and local-visibility campaigns around the commercial niches they want to develop.
Instead of:

• “We sell key-person insurance.”

Lead with:

• “WHO CAN'T YOUR BUSINESS AFFORD TO LOSE?”

That's a business question.
And business owners understand it.

• BE FOUND.
• BE HELPFUL.
• BE REMEMBERED.

ASK EDDIE ABOUT COMMERCIAL PROSPECTING & FYI LOCAL VISIBILITY

RELATED HOW-TO INSURE GUIDES

BUSINESS OWNERS WITH LIFE INSURANCE

• Identify the personal and business exposures surrounding ownership.

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BUY-SELL AGREEMENTS

• Explore the insurance side of business ownership transitions.

VIEW GUIDE

DISABILITY INCOME

• Death isn't the only event that can remove a key person's ability to produce.

FREE SAMPLE
DOWNLOAD FREE GUIDE

SMALL GROUP HEALTH INSURANCE

• Help the business protect another important asset—its people.

VIEW GUIDE

HOW TO INSURE KEY PERSONS

• Identify the Person.
• Measure the Exposure.
• Protect the Business.

ONLY $25
Buy It Once. Use It From Now On.
CLICK HERE TO BUY

FYI EXPRESS+
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