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