Key person insurance can help your business continue to trade if you were to lose an owner or employee who is important to your business. It can help you to replace key individuals, repay debts or provide funds to purchase shares from the deceased owner’s estate, giving you added peace of mind that your business could live on.
Key people can include business owners, senior directors, sales people, production managers and research and development staff. While many business owners agree that the loss of a key person can have dire consequences for their business, the majority do not have any protection in place.
Key Person Protection, formally known as key man insurance, lets you insure your key people for life and/or critical illness cover. It makes sure that your business is compensated with an insurance payout if your key people die or suffer a critical illness, giving you the cash injection you need to ensure your company can continue.
Key person insurance is a valuable form of protection for businesses that cover them in unforeseen circumstances. Alongside business owners and directors, key person insurance can cover employees who are deemed as vital to your business.
This can include any employees who bring revenue into the business or employees who maintain the successful running of the business. The main consideration of whether or not someone is classed as a key person is by measuring the impact to the business if that individual was to pass away, suffer a critical illness or be unable to work due to ill health.
Should a key person included in your cover no longer be able to work, key person insurance will pay out the agreed sum of money that is defined in your cover which will allow you to continue with business and relieve some of the stress you may experience due to the loss.
While you can replace assets, premises or material goods, replacing a key person is not nearly as easy. Having the relevant protection policies in place will help you to ensure that your business can survive the loss of a key person – including yourself.
Whether you are a sole trader, a partnership, a limited liability partnership or a limited company there are specific policies to suit your needs. So, If you want to ensure that your business is properly protected, it’s important that you get some cover today.
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