Key Persons Protection
If a key member of your business was diagnosed with a serious illness or passed away (such as the CEO or a director), how would you continue to run things on a day to day basis? Would your operations be able to survive?
As a business owner in [broker_location], it’s important that you have the correct key person insurance in place. Read on to find out how [broker_name] can help you to protect your business with a policy today.
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What is key persons’ protection?
Key persons’ protection (also known as key man insurance or key man life insurance) will offer your business some financial protection in the event of a key person being diagnosed with a terminal or critical illness or dying.
A key person is defined as a member of staff whose knowledge, experience, skills or leadership has a direct impact on the profits of the business. This could include the owner, managing director, CEO, director, sales manager or sole traders and technical experts.
A key man insurance policy acts as a life insurance policy, and the proceeds will be paid directly to the company or partners in the event of a claim, meaning that the business’ profits will be protected or a debt can be cleared, and it can also help to cover recruitment costs for a replacement or if the business needs to undergo reorganisation.
What key persons’ protection covers
A key man cover policy will provide protection for the following:
- The costs of recruiting a replacement.
- Any profits that are lost in the event that business is disrupted.
- Financial penalties that occur due to to the late or non-delivery of any agreed goods or services.
- Any sick pay that is paid to the key person in question (in relation to a critical illness).
- A loan that is unable to be repaid.
- A business overdraft that needs to be paid back.
- Upfront payments that are required by suppliers.
- Loaned money or salaries or dividends that are owner through a loan account that belongs to a director.
- Protection for sole traders who are personally liable for business debt, as in the event of unexpected death, this debt would be inherited by their next of kin.
Critical illness cover (in the event of a heart attack, cancer or stroke) can also be added as an extra element of cover, and it will pay a cash lump sum on death or one of the specified conditions during the term.
These are just examples of some of the types of key persons protection cover that we look after at [broker_name]. As we know that no two businesses are the same, speak to us today to find out which policies will best meet your needs.
Do I need key persons’ protection?
Protecting your business from the risk of losing a key member of staff is not a legal requirement. However, think about the impact that losing a leader could have on your business. For example, some suppliers may panic and ask for payments to be made up front, customers may lose confidence in the business and loans may need to be repaid.
As no-one can predict the future, it’s likely that if a key member of your business was diagnosed with a serious illness or died suddenly, your operations would be affected as a result. For many businesses, their employees are their most important asset too. Therefore, having a key man insurance policy in place in advance will help to ensure you’re protected and limit the risk of any financial burdens occurring.
The cost of key persons’ protection
The amount that you pay for your key man insurance premium will depend on several factors:
- The level of cover that you need.
- The length of cover that you need.
- Whether critical illness insurance is included.
- The age of the key person.
- The key person’s current state of health.
- Whether the key person is a smoker or not.
- Their family history of illnesses.
- Their lifestyle.
At [broker_name] we understand that cost is important to your business, but it is crucial to ensure that you are properly protected in line with the risks your business faces. With that in mind, we will take the time to understand the specific needs of your business and recommend the amount of cover that is best suited to you.
What else do I need to know about key persons’ protection?
It is important to be aware that if you run a limited company or limited liability partnership, in the event of a claim being paid, the money will be paid directly to the employer. In a partnership, as the key persons’ protection policy will have been written on an own life basis, the money paid may be placed in a trust.
How can I get key persons’ protection?
[broker_name] have a team of specialist advisers ready to help you get the right protection in place for your business.
We will take the time to understand the specific needs of your business and are committed to delivering a completely personalised service, ensuring that you have the best possible cover at the best possible price.
To find out how much peace of mind costs, contact %%broker_director%% by calling: [broker_phone].
