When it comes to insuring your practice, “key-person insurance is very important,” says James Prescott of Texas Medical Association Insurance Trust (TMAIT). A “key person” is someone who is important to the business, perhaps the owner/founder of the practice or another key employee.
There are two types of insurance coverage that offer key person coverage:
Key-person life insurance
The death of a key individual can leave a void in your practice’s expertise and lead to potential loss of income while a suitable replacement is identified. The benefit of life insurance purchased for that individual can be used to maintain the solvency of the organization and assure creditors of the continuity of the business.
Key-person long-term disability insurance
This coverage provides for payment of a monthly benefit to the business during the total disability of an essential employee. The amount of benefit is typically high, reflecting the value of the essential employee, and is separate from any benefits issued individually. The benefits can be used by the practice to pay the salary of a temporary or permanent replacement. The funds can also be used to shore up credit, offset loss of profit, or contribute to the solvency of the practice until a suitable replacement is recruited and trained.
So make sure you have insurance plans that cover these key individuals” so you can get on with business and maintain a healthy, prosperous medical practice.
