Protecting Your Key Workers
Need For Protection
If you have a growing or successful business, your current or future profits may depend on a small number, or even one Key Person. This may be a Director, someone who develops new business contacts or an individual/s with specialist knowledge or skills.
The risk to the health of the business of this/these people dying or being unable to work for a period or permanently could be very disruptive or in some cases have disastrous ramifications to profits. Could your business survive the loss of a key person?
The good news is that you and the business can protect themselves against such a problem by taking out 'KEYMAN PROTECTION'. This can be relatively inexpensive when compared to the risk to the business
What is Keyman Protection?
Your business is very important to you and other owners of the business. Often a successful business is dependent on a single person. Is yours?
- What would happen if this "keyman" were to fall ill?
- What would happen if your keyman were to suffer long term illness?
- Or even worse what would happen if your keyman were to die?
- Will the future of your company or business hang in the balance between success and failure?
Keyman protection and shareholder insurance will not prevent the loss of crucial people in your organisation, but these insurances can help your business recover during the period when your key personnel are not able to work, or need to train or recruit a replacement.
Keyman protection falls into two broad categories:
- protecting your key personnel
- protecting your profits.
This is the same whether you are a Limited company, a partnership or a sole trader.
You should have insurance on your buildings, public liability insurance. You are protected from fire and accidental damage to your property, so why not insure your most valuable company assets your key staff members?
How do you determine who needs this insurance?
Look at your business and think about who is irreplaceable in the short term. In many small businesses it is the founder who holds the company together, he may keep the books, manage the employees, handle the key customers and so forth. If that person is gone, the business pretty much stops.
How much key man insurance do you need?
That depends on your business, but in general you should get as much as you can afford. Think of how much money your business would need to survive until it could replace the key person, recruit a replacement, come up to speed and get the business back on its feet. Invest in a policy that fits into your budget and will address your short-term cash needs in case of tragedy.
Example:
John started a business. He worked many long hours for almost three years, and it looked like all his hard work was paying off. Then one night he was killed in a car crash. He was 35 years old. His wife Jane, tried to deal with the grief of that loss, she also had John's employees, suppliers and customers to think of. She could not afford to employ anyone to take over the business and did not want to have John's reputation suffer. No one planned for this to happen. But it did happen, and Jane had to try to pick up the pieces. John did not have key man insurance, and Jane and the company struggled for almost two years before it managed to get back on solid footing. While key man insurance wouldn't have brought John back, it would have taken a major worry away from his grieving family and employees.
People, particularly when they're young, don't plan on dying suddenly. When you are starting or growing a business, regardless of size, you've got plenty on your mind.
Chances are you haven't thought much about keyman insurance.
By the time you need it, it is too late to do anything about it.
Ring us now for assistance