Several things can go wrong and seriously hamper or even destroy your company or organisation overnight. Insuring against damage to buildings, injuries to the public or employees, and damage to equipment is very well known and is in place in virtually all businesses. Less known is key person insurance, which, if not in place, could bring about a lot of financial damage or even spell the end of your business.
What is key person insurance?
Designed to reduce the impact on business profits if a key person dies or is diagnosed with a critical illness, key person insurance is crucial to cover the cost of replacing essential people in your business.
Who can take out key person insurance?
A key person can range from business owners to company directors that are crucial to the daily operations of your business. However, many employees that affect revenue can also be insured as a key person. For example, an employee who is imperative in the technology of your business or a high-performing salesperson. Business owners, company directors, and key employees can be covered but if you are self-employed you cannot take out key person cover.
What does key person insurance cover?
Key person insurance can get your business out of very precarious situations and you could claim for the following:
Loss of profits
If your business profits are affected by the death or critical illness of a key person then you will be compensated.
Recruitment costs
Key people are not necessarily irrepealable, but the cost of rapidly training or recruiting new employees can be costly.
Loss of contracts
If the loss of a key person means a loss of a contract for your business, then your business will be compensated.
Goodwill
Damage to your brand and good business name affects the level of the business’s profitability and if this becomes altered by the loss of a key person you can claim.
Loans
If any outstanding loans cannot be repaid, due to the worst happening to your key person in your business.
Suppliers and customers
If your business is adversely affected and profits are impacted by suppliers and customers losing confidence in your business.
How does key person insurance work?
This type of insurance is very similar to critical illness insurance or life insurance. You simply pay a premium and receive a payout on the death or proven critical illness of the key person or people. You can insure several of your team as a key person. It could be a shrewd policy to take and help you spread the risk if the worst should happen.
It’s hard to find the right people
In today’s competitive business world where finding, training, and recruiting the right team is not easy. If you have to do so suddenly due to the death or critical illness of an individual who is vital to the survival of your business, the impact is even greater. By talking to your broker, you can create a safety net for your business by tailoring a policy at the right premium. This will help to protect your huge investment of time, money, and energy.
Browse our website to get your key person insurance in place today.