Research has revealed that 54% of small business owners don’t have enough insurance in place to protect their company against the sudden loss of a key employee and 20% of employers didn’t even know key person insurance was a thing that they could get. And yet, as per statistics, 46% of UK businesses would be forced to stop trading immediately if a key person dies or was unable to continue working through illness or injury.
Who is a key person? How does a loss of a key person affect your business?
A key-person is referred to someone who plays a vital role in the financial success of a company. It may be a founder or an employee who sets the business strategy or a top salesman responsible for bringing in the profit. The loss of a key person can affect the company in the following ways:
- Specific knowledge and a valuable skillset
- Productivity and follow through on strategic initiatives
- Revenue/sales, consumer and creditor confidence
- Valuable customers
Why is it important to have key person insurance?
The concept of key person insurance is to protect a business that may be reliant on one, two or several key employees. With adequate protection on key staff, a company will have the money to fund sick pay and recruiting new staff, and have funds available to protect against any large impact the loss of a key employee may have on the business. Key person insurance helps the company survive the loss of any person who is key to making the business work. You can get key man policies which cover life only or choose a policy which covers both life and critical illness. This policy covers for a specific term length, normally over 5-10years and the premiums are generally guaranteed and policies can be cancelled at any time with no penalty.
The primary benefit of key person insurance is the peace of mind it can bring. Should anything happen to you, or the key employees of your company, the impact on the business will be lessened due to the financial cushion provided by adequate key person insurance. Some of these policies also allow you to add an option to protect any loss in profits or the costs you will incur in replacing a lost employee.
We would recommend you to talk to one of our advisers for life insurance quotes.
Any quote that your adviser provides you with will take into account your circumstances, your medical history, as well as your budget!
Call 011-3733-4610 – Monday to Thursday from 11.00 to 19.00 and on Friday between 11.00 and 16.00