15 September 2017
Business Protection – this is more than just key person insurance
What is key person protection?
At the heart of every successful business lies a core of senior executives and key employees.
Could you or a key individual be replaced quickly and your business continue trading profitably in the event of a sudden death or critical illness?
Key Person Protection helps safeguard a business against the financial effects of death, terminal illness and critical illness (if chosen) of a key person. The policy proceeds are paid directly to the business to be used to help replace the key person and help cover the loss of profits that may occur. The policy proceeds could help your business to continue trading in the event of a key director becoming ill and being unable to work.
Is there a person within your business who you feel is key to driving Profits, Performance, Technology, New Sales…..could it be you?
Many business owners agree that the loss of a key person can have dire consequences for their business, yet over 50% do not have any cover in place and 40% say they would cease trading within one year. Key Person protection can help businesses continue to trade if they were to lose an owner or employee key to the business. The policy could help ensure that key individuals are replaced, and profits are maintained, giving you added peace of mind that your business could live on.
Points to Consider:
• What would happen if your key individuals were to die or suffer a critical illness?
• What would happen to your profits?
• How easily could the individual’s skills be replaced?
• Would there be sufficient cash flow to maintain profits whilst a key replacement is found/trained?
Key person insurance can be a requirement if raising capital on a business. It is relatively straight forward to obtain an indication on terms. Cover can be arranged for a sum insured from £100,000 to £25 million and is payable to the business.
The three key questions you should ask?
- Consider who in your organisation is a Key Person
- Consider the impact of a sudden death or critical illness to your business -what would happen to the shares or directors loans?
- Consider the loss of profitability of the business
- What would happen to shares of the business - this type of policy can greatly assist with the purchase and sale of shares
