Most business owners will take the necessary precautions to protect their company and its assets against theft, damage to property, equipment and stock. However, many fail to protect their most important resource – the people they employ.
If you rely on a small leadership team to run and manage your company, what would happen if the owner, or another key person in the business were to suddenly fall ill and be unable to work, or pass away unexpectedly? Would your business continue to run?
As one of your biggest resources, the consequences of losing a key member of your team could be dramatic. Profits could fall, loans may need to be repaid at short notice, at worst, the future of your business could come under threat.
Key person cover is designed to help protect your business in the event of death or severe illness of one or more key employees. If your key employee dies or becomes seriously ill, the policy pays out a lump sum to make up for any loss in your revenue or profits, helping to keep your business on track.
It’s important to carry out an assessment within your company to clearly identify who those key members of your team might be. Think about the skills and knowledge that would be lost if they were no longer able to work?
It’s also important to think about how long it might take to replace a senior level person and what that recruitment campaign might cost, as this will all have an impact on your business. If a team member has all the relationships with your clients, and they pass away, could that see clients leaving the company potentially? All of these are risks which can be overlooked when thinking about the right level of business insurance.
But losing a key person can be disastrous for the long-term survival of a business, large or small, but having the right cover in place can help. Key person insurance can protect against unexpected costs, helping the business to continue to run while you work out what to do next.
It is designed to help protect the business in the event of death or severe illness of one or more key employees. If the key person were to die or suffer from a severe illness, the policy pays out a lump sum to make up for any loss in revenue or profits, helping to keep the business on track.
As well as helping to support business continuity, the money can be used to cover the costs associated with recruiting new employees or for repaying credit or loans while the company gets back on its feet.
There are a number of key features to key person cover:
If you’d like to find out more about how to protect your business against the cost of losing the expertise, skills or knowledge of an individual employee, we can put you in touch with our specialist protection team to help you find out if key person cover is right for you.
We can supply key person cover as part of our business protection insurance. If you’d like to find out more about how to protect your business against the cost of losing the expertise, skills or knowledge of an individual employee, see our specialist webpage or call 0344 892 0078.
Zanele Sibanda has more than 15 years’ experience in the insurance and financial services industry, including as a broker dealing directly with SMEs and corporate clients, as well as high net worth private clients. She is a qualified member of the Chartered Insurance Institute and a member of the Personal Finance Society and the Society of Mortgage Professionals.
Date: August 28, 2020
Category: Care and Medical