Key Person Protection Insurance
Key Person Protection Insurance
How would your business manage with the loss of a key person?
In 2022, an average of 2.5 million UK employees were signed off sick meaning the average number of sick days taken per worker was 5.7
How would your business manage the loss of a key person? In the event that a key employee dies, becomes terminally ill or suffers a critical illness, how would your business cope without that person?
Key Person Protection Insurance could give your business a financial lifeline if something was to happen to one of your key employees.
A business will have various types of insurance policies in place from public liability and employer’s liability to professional indemnity and commercial vehicle insurance however, none of these insurance policies will cover the risk of losing a key employee.
What impact can the loss of a key person have on a business?
If you were to lose a key person from your business, some of the consequences could be but not limited to the following:
- Loss of profits
- Productivity decreases
- A decrease in sales
- A delay in a product launches
- Delays in the completion of existing contracts
- Lack of confidence in the business from finance lenders, suppliers, customers and other employees
- Customers choosing to go to your competition
- Additional costs for recruitment and training
- Relationships between customers and suppliers changing – suppliers may now request for payments to be upfront
These impacts can have a short term and immediate impact whilst some may have longer term implications.
Quick Summary of how a key person protection policy works:
Key Person Joins
A key person joins the company and the company grows and expands with the skills
Key Person Incapacitated
A key person is diagnosed with a terminal or critical illness or unfortunately, passes away
Performance Decreases
The company experiences difficulties, sales & profits decreasing, employees resigning
Key Person Protection Activated
The cover pays out and the company is financially protected
Find a Replacement
Search for replacement and time to train the new person in the role
Return to Normality
Operations return to normality without a significant financial loss due to the key person protection policy.
Who is classed as a key employee?
A key employee is an individual in the business whose contributions significantly impact the success of the business. Their impact doesn’t need to be directly monetary such as someone who works in sales, they could have a skill, knowledge, experience or be in a leadership role.
A key person could be but not limited to:
- Owners of the business
- Managing directors
- Sales managers
- Department heads
- Research development staff
- Technical experts
- Individuals with a specialist and/or specific skill
How do I arrange protection for key persons?
If the key person is the business owner, the business owner may insure their own life or the business may insure their life using the life of another plan. If the key person is an employee, the business owner would insure the life of this person.
Get in touch about Key Person Protection Insurance
Contact Details:
11 Mallard Way, Mallard Way,
Crewe, CW1 6ZQ
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