Question

5 parker and gael are co - owners of a brewpub. both individuals are trained chefs and share the workload of creating the menu, showing the recipes to the kitchen staff, and managing the 12 employees of the establishment. this way, when either parker or gael is away, the other co - owner can continue to run the business. while the brewpub is appreciated for its food, its the award - winning beer brewed by ziba that brings in the customers. ziba is the pubs only brewmaster and is, therefore, responsible for every step of the beer - making process. parker and gael have never given much thought to the risk a disability would have on their business. what should their company first purchase?
a. buy - sell agreement with individual disability insurance on parker and gael
b. business personnel protection insurance
c. business overhead expense (boe) insurance
d. key person insurance on ziba

Explanation:

Ziba is the pub’s only brewer and responsible for every step of beer - making, which brings in customers. Key person insurance protects a business from financial loss due to the disability/death of a key employee (Ziba here). A buy - sell agreement with individual disability insurance is for co - owners’ disability affecting ownership transfer. Business personnel protection insurance is broader for employee risks but not as targeted as key person for a crucial individual. Business overhead expense insurance covers business expenses during owner’s disability, not for a key employee’s role. So key person insurance on Ziba is appropriate.

Answer:

d. Key person insurance on Ziba