Key person insurance - who and why?

Key person insurance is one of the most beneficial types of cover for your business as it financially protects the key players that keep the cogs of your company turning.

This type of policy can financially safeguard your business if the worst were to happen to your most important employees.

What does key person insurance help protect?

Many businesses consider their employees to be their biggest asset because without loyal, experienced, and skilled people working for you, your company could suffer. This policy provides your business with a financial safety net if the worst were to happen to one of these people.

These are just a few of the problems your business may that you may experience after losing a key person in your business:

  • Loss of profits
  • Time taken to find and train a replacement
  • Customers losing confidence in the business
  • Loss of contacts/business that the key person had

With key person insurance in place, the cash injection that this policy could provide would give the business recovery time to be able to overcome any obstacles you may face after losing an integral cog in your business.

How do I know who a key person in my business is?

A key person will differ from business to business. However, key people can be found at any level, as a key person is not defined by their role but rather how valuable they are to the individual business, and what the consequences would be if they were to pass away or become critically ill.

A key person is defined as someone who is essential to the day-to-day running of the business. When thinking about who the key people in your business are, consider who your business would struggle without.

Some of the most popular roles covered by key person insurance are:

  • Managing director
  • CEO
  • Head of finance
  • I.T manager
  • Head of operations
  • Web developer
  • Head of marketing
  • Sales manager

How much cover do I need?

There are several factors that will need to be considered when working out how much key person insurance you may need but this is what our business protection experts specialise in.

Alongside health, lifestyle, and affordability, we will also assess several areas of your business to calculate how much key person insurance you may need. It is worth considering the following questions before your appointment with our business protection specialists:

  • How much would it cost you to find a replacement for this key person?
  • Could your business suffer a loss of revenue in the absence of this key person?
  • What is the net profit that they bring to the business?
  • If this person was diagnosed with a critical illness, would your business be able to survive while this person was off work recovering?

What does a key person policy cover?

This policy could pay-out if one of your key employees were to pass away. Additionally, for an added cost you can also cover your key person/people against critical illness. This means that if the individual were to be diagnosed with a specified critical illness during the length of the policy then you would be able to make a claim.

How much is key person insurance?

As a general rule of thumb, with life insurance, there is no one size fits all option so it would be difficult to know how much you would be paying for your policy without first knowing a little bit more about your business.

This is where our business protection specialists can help. By searching through the UK’s leading insurers and taking into account your circumstances and affordability, we can find you the best key person policy for your business.

Where can I get a key person policy put in place?

At Caspian Insurance, our business protection team specialise in finding the right policies suited to your business and your affordability.

Getting the right protection for your business has never been easier, with years of experience and industry knowledge, our specialists are equipped with all of the tools to help find the right policy for your business.

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