Key man insurance
A key person in a company can be one of a number of people such as:
- Managing directors
- Partners
- Sales managers
- Technical specialists
The loss of an individual such as above– either temporarily or permanently – can be catastrophic for a small or medium-sized company.
It may be the case that you have spent years working to build up your business to the healthy state it is now. Do you want to throw that all away just because you never properly planned for the future? Standard accident or life insurance will only pay out to the individual affected - keyman insurance pays out to the company.
As a matter of routine all companies will take out insurance on machinery, so it seems shocking that many forget to provide provision for personnel, whether CEOs or employees.
Can you honestly state that the loss of either yourself or one of your colleagues would not detrimentally affect the fortunes of your business? How easy are you or other members of staff to replace? What happens if a major shareholder is involved in a tragic accident? If your partner has a heart attack and has to spend months recuperating then what financial plans are in place to deal with this scenario?
Examples of potential critical illness include strokes, cancer or heart surgery; while accidents can happen while driving or carrying out DIY. Death or serious illness are terrible things to think about but not preparing for the worse case scenario could leave your company high and dry.
Why you need key person insurance
Rather than be surprised by such an incident when it happens think ahead and don't allow personal disaster to result in a financial disaster. All eventualities are surmountable if you sit down now and draw up contingency plans.
This is why keyman insurance – also called key person insurance – is so vital.
Whether you are a sole trader, a partnership or limited company you need to set aside some time to investigate and discuss with a specialist the right solution for your business circumstances.
A policy could cover the replacement of a loss of income due to absenteeism, the holding up of profits while the company finds a replacement or to provide funds so that the shares of the deceased can be purchased.
Protection planning for your business can be complex and it is imperative that you implement the solutions that are right for your business. We would be happy to discuss the options available to you and guide you towards the most appropriate solution.
There are many variables to consider, which is where we can help. We can put you in touch with an expert in the field of business and keyman insurance, who can then explain the various options available to you, allowing you to ensure that anything you may decide to do is right for your circumstances. All our independent advisers source the whole of the market to secure the correct deal for you.
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