Key person insurance
What would happen to your business if you lost a key employee tomorrow?
When a key person within any business dies or is diagnosed with a critical illness, it can have a devastating financial effect, leading to loss of customers, damage to market reputation and reduced confidence from creditors.
In fact, according to recent research:
- 53% of business would cease trading in less than 12 months following the death/illness of a key person
- 26% are not aware that a Directors Loan Account needs to be repaid on death
- 60% estimate that it would take up to a year to find a replacement
Key person assurance pays out a cash injection to help replace loss of profits, repay business loans and/or assist in the hiring of a suitable replacement. It can literally be the difference between a company going under or continuing to trade – and premiums are typically fairly low.
Who is a key person?
An individual whose skill, knowledge, experience or leadership contributes to the financial success of the business. Examples are:
- Chairman / Managing Director
- Marketing Manager
- IT/Technical specialist
- Sales Manager
- R&D specialist
The impact on a business
- Drop in sales and profits
- Loss of confidence from suppliers, clients, creditors and other employees
- Loss of market experience and connections
- Requirement to re-pay a Directors Loan
- Difficulty in securing new finance
- Need for recruitment costs