Would Your Business Survive If Your Co-Founder Died Tomorrow?

by Liran Hirschkorn


If you’re like most founders, your team is your second family. You spend nearly every waking hour together, finish each other’s sentences, and even laugh at the jokes they’ve told dozens of times.






But have you ever thought about what would happen if you lost a key employee or co-founder? You probably have life insurance for your husband or wife, but what about your work spouse? While no one likes to think about these things, the death of a critical team member wouldn’t just be a personal tragedy; it could also spell disaster for your business.


So how can you safeguard the future of your business and ensure you don’t lose necessary cash flow when your company needs it most? By planning for the unthinkable with key man life insurance.


Treat Your Key Team Members Just Like Family

Key man life insurance is just what it sounds like: It provides a safety net for when a crucial team member dies by acting as a life insurance policy, with the business as the beneficiary. You can take out key man life insurance on the business owner, the CEO, or any employee who is necessary for the business to operate.


Just as you have life insurance to protect your surviving family members, you need to identify the employees whose loss would pose the biggest financial risk to your business.


For instance, if you owned a small tech startup and virtually all of your employees were software engineers except for the office manager, it would make sense to take out key man life insurance on her. If she died, you’d need help covering payroll and accounts payable while continuing to run your business as you looked for her replacement.


Likewise, if you had a sales manager who handled more than half of your company’s accounts, you’d lose crucial revenue from her relationships if she ever died. Without key man life insurance, the dissolution of her book of business could cripple your startup.


Do You Need Key Man Life Insurance?

If you’re not sure whether your business needs key man life insurance, ask yourself, “Do I have any employees who are crucial to the success of the business? What would happen if those employees died tomorrow?”


On an episode of the show “The Profit,” the owner of Artistic Stitch gives a partnership interest to the only employee who knows how to run the embroidery machines. He knew losing this employee would be extremely detrimental to the business, so he offered him 10 percent of the company as insurance that he’d stick around.


Investing in key man life insurance is a decision that requires this proactive mindset. If your business could survive the loss of an employee without a substantial loss in revenue, you may not need it. But if the loss of that employee would leave the business struggling to stay afloat, it’s a worthwhile investment.


Key man life insurance isn’t a pleasant thing to think about, but it’s there to ensure a personal tragedy doesn’t also leave you bankrupt and jobless. At the end of the day, it will give you peace of mind to know that you and your business will be protected if the worst should happen.



liranLiran Hirschkorn is an independent life insurance agent and founder of BestLifeQuote.com, a national life insurance agency. His mission is to help individuals across the U.S. find the best rates on life insurance, specializing in helping those who have previously been declined coverage. Liran’s expertise is in high-risk life insurance and understanding the unique underwriting guidelines of more than 30 life insurance companies.


Photo Credits

kwest | Courtesy of Liran Hirshkorn