All successful businesses have one or more key individuals on whose skill, experience and knowledge the success of the business depends. Should they become seriously ill and be unable to work, or die unexpectedly, your business could suffer.
What is a key person?
A key person is any member of staff who has a direct impact on the profits of the business, such as the business owner, director, salesperson or any employee with specialist skills or expertise.
If a key person in your business died or became seriously ill, would your business be able to:
- Fund the cost of recruiting and training a qualified temporary replacement member of staff
- Sustain the loss of profits while the business is disrupted
- Cope with any late delivery penalties
- Pay any company sick pay to the key person
What is Key Person Protection?
Key person protection covers your business’s key people in case they die, become critically ill or find themselves unable to work through a long-term sickness. Key Person Cover gives you a cash injection paid directly to the company or partners, helping you to protect your profits, pay for any extra recruitment costs and clear any outstanding business debts, allowing you to continue trading as normal.
How does Key Person Cover protect your business?
With key person protection, you can cover your key people and receive a lump sum if they die or suffer a critical illness. Or you can choose to protect the profit this key person generates for the business, should they be unable to work through illness or injury. This would pay an income each month to cover the amount of profit that this key person would have been bringing into the company. This could help you continue to pay any bills or ongoing expenses.
What are the benefits?
- Cash injection paid directly to the company or the partners
- Pays the cost of recruiting and training a replacement
- Gives you the option to clear any outstanding business debts
- Protects your profits by paying for any unforeseen costs
Business Continuity Planning
Business continuity planning plays a key part in protecting the stability of your business. It ensures your business continues to trade if the unexpected happens. Key Person Protection is just one area of business protection. You might also want to consider protection for shareholders or partners. Without this type of cover in place, if the shareholder dies their shares could go to someone with no interest in your business, maybe even a competitor. There’s also business debt protection, and tax efficient Relevant Life Cover which makes staff feel more appreciated so they’re more likely to stay with your company for longer.
Find out more. Download our business continuity guide.
Why choose The Finance Roome?
We understand the complexities of business continuity planning and depending upon whether you’re a sole trader, limited company or partnership, our business protection team can advise you on the most cost-effective options for your business. We listen to your specific needs before searching hundreds of business protection products to find one that matches the individual requirements of your business.
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