Wifi, premises, tools, electricity, coffee and laptops are all things mentioned when you ask anyone in business what is essential to keeping things running. But what about key people? What about key men and woman that are essential to your business turning a profit? Just what would you do without them? How would your business cope?
What is key person cover?
Key Person cover is a policy taken out by the business on the life of someone who is essential and integral to the business. It helps provide you with a financial comfort blanket if a key member of staff dies or is diagnosed with a serious illness (that’s if critical illness is included). The insurance payout is paid directly to the business helping with business continuity, loss of profits or productivity, recruitment and to support keeping the business trading.
A sudden loss of an employee can have a huge knock on effect, not just financially but can provide a skill and knowledge gap which can’t be filled quickly.
Who is a ‘key person’?
- Employee with specialist skills
- Sales Director
- Senior member of staff
Can any business have key person cover?
Cover will depend on your legal structure. Getting advice is essential and where a broker will really add value. Depending on your business type (sole trader, partnership, Ltd company) will affect how the cover is set up.
How much would a person be covered for?
Amount of cover completely depends on the unique nature of the business, but could be worked out by looking at:
- Recruitment costs
- Multiple of salaries
- A number of month’s/year’s profits/turnover
- Business loans
Is key person cover right for my business?
If after reading this article you are thinking the thought of losing a key person through illness or death would have a huge negative impact on your business’s profits, then it’s definitely worth exploring the cover. At A-Plan Life and Health we have a wealth of experience and would talk you through the options and products available to your business.
Thoughts from an expert
Mark Donaldsdon, Head of Business Protection, says “too few businesses consider their ‘people risks’. Everyone deals with assets like vehicles, stock, premises and liability and then they forget to cover arguably their most important asset- their people.”
Call our Group Protection team for a FREE and expert discussion on 01242 894930 or request a call back from our qualified team using the dedicated form.