Key person protection

Key person insurance is taken out by a business to cover the financial consequences of the death, serious illness or prolonged disability of its key personnel.

The following factors will need to be considered when assessing the financial implications of the loss of a key person:

• loss of profit;
• loss of personal contacts and goodwill;
• time spent recruiting a replacement and the cost of providing a temporary replacement;
• decline in turnover;
• reduction or withdrawal of bank facilities;
• loss or reduction of credit arrangements with suppliers;
• loss of specialist knowledge and expertise.

By insuring the life of a key person against premature death, critical illness or total disability you can safeguard the business against the loss of profits and provide a breathing space during which time a suitable replacement can be found or the company can be restructured.

• Do you have this in place?
• What would happen to your business if your most valuable member of staff died or was unable to work?
• How would your business survive?