Which employees are key to your business? It’s not uncommon for Small to Medium Enterprise’s (SMEs) to have an individual, or key individuals, without whom the business would struggle.
Sometimes this can be the director of the business – they have all the key contacts and steer the company. However increasingly firms are safeguarding against the loss of other key individuals too.
This could be a sales person who brings in the majority of new business, a designer, a programmer, content writer, mechanic, or engineer whose specialist knowledge your company depends on. Any employee with responsibilities or individual whose skills, knowledge, experience or leadership contributes to financial success and day-to-day running of your business is worth investing in with Key Person Insurance.
These are the people who are crucial to the profitability and sustainability of a business – the ones whose absence could spell disaster for your company.
Key Person Insurance protects against the death or critical illness of the individual. The premium is usually deemed as a company expense and the benefits are paid directly to business. This can be a very cost-effective way to safeguard your business.
The purpose of insurance is to give an injection of capital at a time when it is needed most, with the funds being used as the company sees fit. This could include the costs of a temporary employee to fill-in during the difficult time.
To cover the costs of the recruitment process or to plug the cost of potential loss of turnover for a period of time. You could pay off debts or investors, provide a capital injection to cover loss of sales and goodwill, or even to close the business.
The benefit amount can be calculated in many ways, but ultimately must be deemed fit to alleviate the problem the loss of the individual would cause to the firm.
Pareto Financial Planning can advise on Key Person Insurance and other ways to prepare for the loss of people – whether temporary or permanent – who are vital to your business.
It’s important not to confuse Key Person Insurance with personal life insurance. Key Person is taken out by the business for the benefit of the business. An Employee would need a separate policy to make sure surviving family members are taken care of in the event of death or critical illness.
As business owners you will be familiar with the various types of insurance that you rely on to protect your business. Unfortunately, death and sickness are some of the most prevalent situations to affect a business – with the correct advice there are very simple cost-effective solutions to safeguard the future of your company.
For further information call 0161 819 1311 – Ref: Caunce O’Hara or click here to arrange for a call back.
The information in this article has not been written by Caunce O’Hara Insurance Brokers Ltd or any of Caunce O’Hara’s employees. None of the opinions or views contained within this article are Caunce O’Hara’s nor do we accept responsibility for any financial advice given within the article.
Caunce O’Hara Insurance Brokers Ltd do not provide Life Insurance policies nor advice regarding Life Insurance or accounting and bookkeeping.
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