Key Person Protection

Protecting its key people should be an integral part of any company’s business plan. Many small businesses already protect a lot of the important things that keep them running smoothly, such as property, vehicles, plant and stock. So it makes sense to insure your most valuable assets: your staff and business partners.

A key person could be an employee whose knowledge and expertise are vital to the success of the business. Additionally, the partners themselves are likely to be key to its continuing success.

Key person protection will provide funds to keep the business operating if someone who is key to its success dies, or is diagnosed with a critical illness that stops them from making their usual contribution to the firm’s day to day operations. For example, the funds could assist in finding, training and paying a suitable replacement, or make up for lost income streams while the replacement is being sourced.

Losing a key person could be disastrous for the long-term survival of your business. The loss could leave you without some vital skills and knowledge and make the business more vulnerable to the following potential problems:

• Sales could fall
• Loans could be called in
• Suppliers could demand immediate payment
• Customers could choose to go elsewhere
• Recruitment costs (including paying a temporary replacement) could be higher than expected

Key person cover will give your business some welcome breathing space during what will be an unstable and uncertain time. It will provide the funds to make sure:

• Production can continue
• You can continue to fulfil your contracts
• You can maintain sales relationships
• Staff will be confident that their jobs remain secure
• Suppliers will be confident that they will get paid
• Customers will be confident that their orders will be delivered
• Investors will be confident that their money is safe