Key person insurance can be valuable to any business, no matter how big or small. It is designed to protect a company when one of their key workers, those essential to the business’s operation, becomes unable to work due to illness or if they pass away.
Have you considered how your business would continue to run if you lost a key person? It is estimated that 52% of businesses fail to survive 12 months if they lose a key person, yet only 18% of businesses have key person insurance.
Key person cover combines parts of critical illness cover, life insurance, and income protection insurance to ensure that the financial stability of a company is protected.
The funds can be used to meet the company’s financial needs while it re-organises or recruits a replacement. In the case of a critical illness claim, it’s possible the key person will return to work, so the funds can be used to pay for a temporary replacement or replace lost profits. Key person insurance can be arranged to provide either a regular income if the key person is unable to work because of an illness or accident, or a lump sum if they die or are diagnosed with a critical illness.
Who counts as a ‘key person’?
A key person is any employee, including owners or managers, whose loss from the business through death or illness will have a significant effect on the profits or financial position of the business.
Only you and your business can decide who counts as key to your business. Therefore, if someone’s absence affects the way your company operates, they can be covered by key person insurance.
For any enquiries or to express interest in key person insurance, please contact us and one of our friendly professionals will be in touch.