A business owner may choose to take out a key man insurance policy on the life of a partner or a valuable employee; however a key man disability insurance is just as important. This coverage ensures the continuity of your business and protects your profits should a key player in your organization fall ill or become permanently disabled. Not all insurance providers offer this type of business life insurance however, so finding a reliable company should be high on your priority list. Here are some important tips in applying for key person insurance for disability.

Check for the most competitive rates available

Many key man insurance policies that provide disability benefits are offered at different rates, depending on a number of criteria. Most of these policies are of a short-term nature, so you might want to verify first whether you’d prefer shorter-term or a longer-term coverage when it comes to insuring your business. Finding a suitable replacement can take some time depending on the skill set possessed by the key employee or the scope of his responsibilities within the business. Some key man disability insurance policies work under the assumption that finding a good replacement can be done within 12 to 24 months. If you think your business can find a good replacement within that period, getting these types of disability coverages can work well for your business.

Preparing for the key person insurance interview and exam

Most insurance providers will require an interview and an exam prior to the approval of the policy. Normally the interview will be short and may be done in person, online, or over the phone. The purpose of the interview is for the company to complete the personal profile of the insured to make sure that no important detail is left out. Moreover, a physical examination is needed before the approval of a key man disability insurance. Routine physical examination may involve blood pressure checks, blood and urine tests, or even an EKG.

Choosing the payout option

During a claim, a key person insurance policy for disability is normally paid out in two ways – monthly and lump sum. The monthly benefit payout has a shorter elimination period, usually between 30 to 90 days depending on the insurance provider. A shorter elimination period means that only a short period is needed before your business can make a claim on the policy. In the case of lump sum payouts however, a longer elimination period of 365 days or one year is common, although this period may vary depending on the provider.

A good key person disability insurance policy can save your business from potential losses in the event that a key worker or partner becomes temporarily incapacitated or permanently disabled. The proceeds of the policy may also be used in hiring a new replacement. By keeping in mind these helpful tips you can find a disability insurance policy that will provide your business with the protection it needs, so that productivity and profitability are not compromised in the absence of one or a few valuable employees.