How Valuable Was Your Dead CEO?

In all seriousness I hope you don’t ask yourself that question after the fact. Whether you are the President of the company or on the Board of Directors, or the Janitor you should know that the death of the CEO of a company can pass one of two ways, 1. Planned for with enough business life insurance to calm the waters and keep the creditors from calling everything due or 2. Unplanned for in which case you will remember that day as the first of the last days of your company or employment.

The CEO clients I have take their job seriously and don’t take lightly the catastrophic “what if’s” that impact some company somewhere everyday business day and most weekends. They know that the fact that their signature is on business loans and their signature is on contracts and agreements means that the parties on the other end of each of those has put trust in them. It’s not unusual for a company to get a loan or get the opportunity for a business deal because the CEO’s reputation warrants that kind of special consideration. And it is that kind of CEO who hopefully carries business life insurance to back up their signature because they know that without it their death could well take the wind out of the sails of all they’ve helped create and all of the opportunities of the people that have helped them create it.

So is business life insurance really a necessity? It’s a fair question to ask because as the owners and CEO’s of companies we’re not only responsible for how much money is made, but how much is spent. The difference hopefully being profit. If you’re the only one dependent on the profit from a business, a single sole proprietor for instance, or the business you’ve created really isn’t dependent on you to continue or make good on debt, then the answer is no. If you need a note from me to let you off the hook go to my contact page, but honestly if there isn’t anyone dependent on your existence who would you give the note to?

But for most companies, even from the smallest S Corps that just feed a family or two to the largest companies where the death of the key person in a company ripples off into employees, investors, bankers, customers and stock holders, business life insurance is really more than just kind of important. It doesn’t take much of a stretch to get the kind of nervousness that could work its’ way through a bank holding a large amount of business debt if the guy that signed the loan papers on behalf of the company was suddenly not available to steer the ship any longer. Do you call the note or do you wait and see if the company takes a nose dive and then try to call the note when you know everyone else with an interest in the company is trying to salvage their portion as well. With business life insurance in place as collateral on a loan there is no nervousness or need to fight for position.

Often the CEO or owner of a company owns a large amount of stock, if not the majority, and upon their death the family, in the absence of a lot of confidence about the future of the company, will want to sell the stock. Dumping that amount of stock on the open market can pull the rug right out from under even a healthy company, but if there is business life insurance that is in place for the sole purpose of stock repurchase from the family, everything remains stable. The family gets what they want and the market doesn’t read more than is necessary into the movement of the stock back into company control. Another consideration is the same type of coverage on a major stockholder that owns enough stock in your company that there death and the sale of their stock could cause stock holders to have a bad day.

And remember that if you run into problems being approved for business life insurance we have a backup plan that can put the life insurance you need in force within days to keep that loan closing on track or keep from losing a business deal that has a deadline. We’ve been able to put business life insurance in force within 3 business days avoiding lost time and money for all the parties involved.

Bottom line. We’ve all seen companies that have had panic inflicted on them when there is an unexpected change. Business life insurance, whether key person, business loan collateral or buy/sell is exactly the right tool for keeping the wheels on and avoiding a meltdown. If you have questions or are paying too much for your current business life insurance, call or email me directly. My name is Ed Hinerman. Let’s talk