Protect your business with key person insurance
Why is key person insurance important?
It is worth considering what the consequences would be if a director or employee with specialist skills died or became seriously ill. So often this can have a large impact on a business in terms of lost revenue and staff replacement costs.
Many companies have one key employee who is responsible for bringing in a larger portion of the profits. Therefore, this person becomes a vital asset to the success of the company. Therefore, this insurance protects and compensates your business for the loss of a valued employee. As well as keeping the business moving forward with a fixed lump sum of cash.
Some advantages of Key Person Insurance;
- Enables you to repay any loans taken out by the key employee.
- Helps with recruitment and training costs for replacement staff.
- Allows you to meet ongoing expenses whilst the level of sales recovers. Also, facilitates payment for outside consultants or expert advice.
- It instils confidence in staff and customers due to positive action being taken and financial obligations being met.
How does key person insurance work?
Key person insurance is a life insurance policy taken out by a business on the life of a key employee. It is also possible for the policy to pay out in the event of the key person being diagnosed with a specified critical illness such as cancer or heart attack.
Should the key person die or suffer from a critical illness the policy would pay out a lump sum to the business, so the business can use these funds to cover the costs of losing the key employee whilst they recruit and train a replacement.
You must ask yourself these questions...
Who is responsible for the following key business areas:
- Production of goods or services
- Financial control
- Sales and Marketing
Questions to ask yourself:
- What impact would their loss have on the business financially?
- Could anyone else in the business do their work?
- Would the business need to train and recruit a replacement?
- Does the business have the money needed to find a replacement?
- Could the company recover without an injection of funds to replace the loss of profits?
- If a key person was diagnosed with a critical illness (such as cancer) and needed time off work for treatment and to recover, could the business afford to pay their salary and a replacement’s salary?
- Would you be in danger of losing a contract or important contacts if you lost a key person?
- Are there any business loans in place that are secured against the owner’s family home?
What we can offer
There are various options to choose from with key person life insurance. You could opt for life cover only, critical illness cover, or both life cover and critical illness cover.
You can select different levels of cover and terms depending on your requirements, and there are also policies available that pay out a regular income in the event of sickness.
If your business already has cover in place, The Health Insurance Group can offer a no obligation free review of your existing arrangement. We have access to some of the most competitive rates in the market place and work closely with all of the main insurance providers. Certainly ensuring we get the best, most cost-effective deals for you. Contact us today to find out more about the key person insurance schemes we offer...
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