What is Key Person Insurance?
For many businesses some the of the most important assets are their staff and the loss of key staff members who contribute greatly to a business’ success (i.e. Directors, top Salespeople, Partners or Owners) could result in the business losing revenue, profits or its overall financial security.
Business can take out insurance called ‘Key Person Insurance’ which would assist in removing any financial burden or risk in the event one of more staff members die, become permanently incapacitated or be diagnosed with a serious illness like cancer or a heart attack.
The funds could assist a business in several ways, such as:
- Paying off any business debts
- Covering any falls in sales or profits
- Covering the cost of recruiting any replacement staff (i.e., a temporary replacement for a director on leave due to a heart attack)
Usually, the business would own the insurance as it is the business that is usually the beneficiary of any payout in the event of a claim.
The level of cover required with differ for each business and will be based around the business’ debts, the value of the business, the effect a key person would have on the revenue of a business and the costs involved in recruiting a replacement.
To find out more regarding Key Persona Insurance please contact us today.
