What would happen to your business if a key founder, or a key person, was unable to work through a critical illness or death?
What would happen to your business without that leader? What would happen to the finances and the credit rating of your business?
A Key Person Insurance policy is taken out by a business to cover the loss of profits that would occur if a key person died or fell critically ill. The company would be the beneficiary of the plan and would pay the insurance premiums.
If your business needs to recruit immediately to cover your key person’s skills then you may have to pay over the odds to attract the right person. The insurance cover provides the business with a lump sum of money, or a regular payment, so they can continue trading reducing the possibility of banks calling in loans, suppliers refusing to supply and customers switching to a competitor.
A key person is someone whose death or critical illness would have a serious effect on your future profits, or the survival of the business. You may have one or more employees who make a vital contribution to your profitability. The size of an individual’s shareholding will not necessarily indicate who is a key person. Please contact a member of the Financial Planning team at T H March for information on Shareholder Protection.
A person may be key to your business because they:-
There is no set method for working out an appropriate amount of cover. The insurance provider will want to make sure that they are insuring an appropriate amount, can request to see financial accounts. Call or email the Financial Planning team at T H March to discuss the key needs of your business.
The key person may need to fill in a medical questionnaire and the provider may ask their GP for a report. In some cases insurers ask for the key person to attend a medical assessment. These are normally paid for by the insurer. If they have any existing medical conditions, or have suffered any in the past, it’s their duty to disclose them. A previous illness does not necessarily need to be a barrier to a business in taking out Key Person Insurance; TH March can help to navigate the nuances of policies and find a solution to fit your budget. You might be surprised by how little Key Person Insurance can cost for a very large sum insured, especially when you compare it to your other insurances. Call us on 01822 855555 or request a call back.