Besides a succession plan, a type of life insurance policy on a person crucial to a business — what’s known as key person insurance — can provide a lifeline to the business.
C. John Bongiovanni, who has been president of Bon Tools since his father, Carl, died of a heart attack in 2017, said he had also dealt with a lack of a succession plan. But what made the initial transition especially difficult, he said, was the lack of insurance, which would have given him some breathing room to sort through the company’s finances and tend to its 70-plus employees.
“The toughest thing at first was to circle the wagons and figure out what was what,” he said. Key person insurance would have also relieved him of some of the pressure he feels to buy other parts of the business, like its real estate, from his mother and to begin to compensate his two sisters, who are not part of the business.
Author(s): Paul Sullivan
Publication Date: 12 February 2021
Publication Site: NY Times