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While it's often said that no one is indispensable, there are some people who are crucial to the day to day operation of any business. What would you do if one of your key people was suddenly out of the picture? How would it affect your bottom line?

Replacing some one that is vital to your business can take time. Finding people with the right training and experience in your particular type of business can be difficult. While you are looking for the right person your business can suffer losses. You can protect against those losses with key man insurance. Key man insurance protects against business losses suffered when one of your employees, who is crucial to the success of your business, is suddenly gone.

This type of insurance is usually purchased to cover upper echelon employees in mid to large size companies. You can buy director insurance to cover members of your board that are actively involved in your business operations. Director insurance protects you from financial loss if one of your directors is suddenly gone for any reason. Key man and director insurance is an important part of protecting any business.

As with any insurance, key man insurance requires payment of a premium. This would be considered part of the business operating expenses. You may think that you don't need this insurance that director insurance and key man insurance is not worth the premium. That's like thinking that you don't need life insurance to protect your family if something unforeseen happens to you.

You probably have life insurance and disability insurance. You probably don't think that you'll need to use it, but you pay your premiums just in case. You may never have to make a claim under your key man or director insurance either, but what if one of your key personnel suddenly died? You may not want to consider that eventuality, but life is unpredictable. It's better to be prepared for the worse case scenario than to be caught by surprise.

Even smaller businesses can benefit from key man insurance. For example, if you have a restaurant that's success is predicated on the reputation of your executive chef, what would happen if you lost him? You may have a written contract, but what if your chef had an accident and was going to be away for an extended period? Your customer's won't care why your chef isn't there, they will just know he's not preparing their food and they may take their business to a competitor. This could have long tern consequences for your restaurant's bottom line.

A key man insurance policy can protect your profits until your chef returns or until you can replace him with a chef that has the same type of reputation. In any instance where your business will be severely impacted by the loss of a particular employee key man and director insurance can keep your business on track until you can recover from the loss. When you consider your premiums in this light they worth every penny.