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Technology Insurance
Loss Scenarios for IT Firms
  Defending software that performed as promised.
A software company was sued by a customer after he used the company´s cost estimating software. The software itself was found to have functioned perfectly. The customer eventually dropped the case, but only after considerable legal expenses were incurred by the software company.
Indemnity Paid: $0
Defense Cost Paid: $175,000

The Loss of a Key Person


Loss of the key person may also make the running of the business less efficient and result in a loss of capital. Losses caused by the death of a key employee are insurable. Such policies will compensate the business against significant losses that result from that person’s death or disability. The amount and cost of insurance needed for a particular business depends on the situation and the age, health and role of the key employee. Key employee life insurance pays a death benefit to the company when the key employee dies. The policy is normally owned by the company, which pays the premiums and is the beneficiary.

If you own your own business, it represents many things to you. A successful business is your livelihood, your security, and your investment for the future. It is a valuable asset that you can safeguard in a number of ways.

To help protect your company from the loss of a key person, InsureCast offers Key Person Life Insurance coverage.


Key Person Life Insurance


What is Key Person Life Insurance?

This coverage is designed to protect your business upon the loss of a key employee. The tax-free proceeds from this policy can be used to find, hire and train a replacement, compensate for lost business during the transition, or finance any number of timely business transactions.


When is Key Person Life Insurance needed?

Key Person Life Insurance is often required in order to obtain funding. Venture Capitalists will want an assurance that they can recoup their investment if something happens to the founder of the company, or to the CTO.

Why do I need Key Person Life Insurance?

Key Person Life Insurance is a way for investors to protect their investment. Usually, one or two key people represent the technical genius or creative talent in a new venture. The sudden death of such a person can have a disastrous financial affect on the company. It can weaken the company’s credit rating, or require the sale of a portion or all of the business if there is no way to cover costs while a replacement person is found.

Can I insure the life of a key employee?

Human resources are a company’s most important asset. Particularly in the case of technology companies, where the future success of the company is dependent on the founder remaining with the company. Accordingly, it is important for an emerging growth company to prepare for the unfortunate chance that the founder of the company or key personnel cannot carry out their responsibilities. Every technology business employs people whose contributions are of vital importance. In a small business, these key employees have a more direct effect on the bottom line, because you don’t have multiple employees with the same skill sets and levels of talent. If your key employee’s departure is planned, as in the case of retirement or voluntary termination, you can prepare for the loss and take steps to minimize its impact. However, if the employee becomes disabled or dies, the loss is unpredictable and leaves your business exposed to financial risks.

If a key employee dies, the employer receives the policy’s income tax-free death benefit and can apply it towards business expenses or losses caused by the employee’s death.

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