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What is Key Person Insurance and why do you need it?

Business is all about people. You'll often hear jargon such as 'business to business',  “business to consumer', but ultimately, people buy from people. You can name any department in any company and people are what make everything tick, not the product or service (however good it may be).

Within a company, there will also be key people who drive the company forward, who are pivotal to the future success of the business. This could be a visionary business owner, a top performing salesperson or an invaluable software engineer. But what happens if anything should happen to that person? Nobody wants to think about it, but would your business grind to a halt?

A Key Person Insurance policy would pay out a lump sum if a key employee within your business died or was diagnosed with a critical illness. The key thing that Key Person Insurance does is to ‘buy’ you much-needed breathing space during a period of unexpected instability and uncertainty.

Rightly so, the focus for a business at such a pivotal time should be on the key person and their family, but history shows that many companies, large and small, have been defined by such incidents and ultimately have gone out of business. By having contingency plans in place, such a scenario is preventable.

The lump sum that will be paid out can be used to plug the gap of any loss in profits, simply keeping the business ticking over.  The money can also be used in another ways, such as to help cover recruitment costs or clear outstanding business debt.

If you think your business may suffer from any of the following, Key Person Insurance is something to explore further:

·        The loss of crucial business contracts

·        Loss of proprietary intellectual property

·        Sales targets being negatively affected

·        Factory production being stopped

·        Loss of business strategy

 

If you would like to discuss Key Person Insurance, please get in touch with us on 01302 244 977.

*The purpose of this blog is to provide technical and generic guidance and should not be interpreted as a personal recommendation or advice.

Publish date: 5th December 2018

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