If you are a business owner and looking for a key person insurance policy, you need to be aware of the common pitfalls in shopping for this form of business insurance. Doing so will help you find the best possible coverage for the kind of business that you have, at the lowest possible cost. Here a few of the common mistakes when buying key man insurance.

Rushed purchase of a key person insurance policy

It’s virtually impossible to secure a good policy for your business when you’re trying to shop in a hurry. It’s important to understand that the normal procedure in obtaining a key man insurance coverage for your business can take anywhere from 4 weeks to 6 weeks. Thus, if you must secure a policy for your business, make sure that you allow for ample time for the processing period.

Lack of understanding on the financial justification requirement

A key man insurance coverage adheres to a financial justification requirement, wherein the insurance coverage amount is dependent on the realistic and calculated risk of loss faced by your company. Once you have applied for any type of business insurance policy, most insurance companies will match the coverage with the risk of loss associated with your business, prior to approval. By failing to understand this financial justification requirement, your business could obtain less coverage that you might have expected.

Failing to disclose important details on health and lifestyle

Health and lifestyle details are important in obtaining appropriate coverage on your key person insurance policy. These details will help you obtain a policy that is priced just right.

Choosing a policy that does not provide enough coverage

It is important for you to obtain a policy that will provide your business with the kind of coverage that it needs, taking into account the number of valuable individuals within your employ and the inherent risk of loss to your business. Good coverage should not only cushion your business from possible losses arising from the loss of an executive, a partner, or a skilled employee, it should also be able to cover the day to day continuity of your business operations.

Failing to obtain key man disability insurance

Although key man life insurance is a more popular option for many business owners, a key man disability insurance is just as valuable. You will never know when a valuable personnel might fall ill, becomes temporarily disabled, or permanently incapacitated. A key person disability insurance will protect your bbusiness in these dire situations.

Not getting the services of a reliable insurance agent

If you have no experience in shopping for key man insurance, you will most likely need the services of a competent and highly experienced insurance agent. Some business owners however fail to obtain the advice and expertise of an insurance agent, so they end up getting insufficient coverage, or worse, choosing the wrong type of policy.

Shopping for a good key person insurance coverage can take some time. By steering clear of these mistakes, you are assured of getting good coverage, so you can give your business the protection it needs.