Key person insurance can be very helpful should an instrumental person within the business pass away or be diagnosed with a critical illness. Key person insurance essentially means the business can insure itself against any financial losses it would incur in this instance.
If your business is dependent on a few specialist people, key person insurance can be helpful as it will protect the company if you were to lose one of these people. Losing a key person in the business can sometimes have a devastating impact on the business’ finances. If you are worried that your business is at risk of this, taking out key person insurance could benefit you.
Key person protection insurance is a form of life assurance that is taken out to cover any instrumental figures within your business. The policy is owned by the employer, with the pay-out being payable to them too.
If you lose a key employee or they are unable to work for a long period of time, your business might lose profit, sales and generate an unbearable workload for the remaining staff. It is important to consider key person protection insurance for these reasons, as it can help your business to manage through difficult times.
The policy will pay out a lump sum to help compensate for any losses your business encounters in this situation. Key person cover can sometimes also include critical illness cover. When it comes to choosing the right amount of key person insurance cover, you should consider things like recruitment costs, multiple of profits and loan security to help pay off any debts.
Almost every business has key individuals with specialist knowledge or skills, and without them, your business would suffer.
Please note that the descriptions above do not constitute financial advice and may change depending on individual circumstances and budgetary requirements.
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