Keyman insurance (Key Person Protection insurance) is a means of insuring your most important personnel in order that your business can continue trading in the event of their loss due to death or critical illness. Whatever industry you are in or however large your company is, there will be at least one or more key individuals who are important to the smooth running of your business. Whether it be yourself or one of your employees – the owner, Managing Director, Sales Manager, technical experts or others with specialist skills – your business will have someone who makes a major contribution to the success or profitability of the business.
Key Person Insurance
If that key person were to die or be diagnosed with a critical illness, it is highly likely that your business would be severely affected in a number of ways. Suddenly losing the skills, knowledge, leadership or experience contributed by that person could results in an immediate loss of productivity and profits for the business, and the costs incurred whilst having to recruit and train a replacement could be significant.
The unforeseen knock-on effects – such as the loss of crucial business contacts connected to that person, the cancelling of contracts maintained by them, the goodwill and the subsequent loss of customer’s and supplier’s confidence in the business – could all have an abrupt and detrimental impact on the business. Plus, any outstanding loans or obligations of the business would still need to be paid in event of the death or critical illness of that key person.
With Keyman insurance, your business can protect those who are most important to your business. In the event of the death or critical illness of any of the people covered, the business will receive a lump sum payment, which could be used to pay off any outstanding loans, recruit and train new members of staff, employ temporary replacements in the interim or lessen the financial impact of any drop in trade or the loss of any contracts. Some business contracts may even specify that key person insurance is already in place. This can help protect all parties involved.
Spectrum FA have helped many businesses to protect their key personnel through Keyman Insurance and are experts in this field. With many years of experience, we have worked within numerous situations and scenarios and we always take each case individually to provide a truly bespoke service for our clients.
If you would like to find out more about Keyman insurance or how Spectrum FA could help you protect your business against the loss of your most valuable assets, then please get in touch with us today to arrange your free, no obligation review. You can contact us by email at firstname.lastname@example.org, by phone on 01279 315 013 or by using the contact form on the website.
Spectrum FA’s experienced advisors will guide you through the process and to ensure your business is protected from the unexpected.
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Spectrum FA work with some of the best known and most reliable insurance providers, so you can be sure that your business is well protected when you need it most.
Spectrum FA have access to the leading life and critical illness insurance providers available and will source competitive premiums for your business.
Frequently Asked Questions
What is Keyman insurance?
Key Person Protection – alternatively known as keyman insurance or keyperson insurance – is a type of insurance that protects a business in the event of the death or critical illness of one of their key personnel.
Many businesses have at least one member of staff who is fundamental to the smooth running of the company, whether that be the owner, Managing Director, main product developer, primary investor or anyone else who does a job that cannot be done as effectively by anyone else. If that key person was to die or be diagnosed with a critical illness, then the impact on the continued successful running of the business could be immediate and have long lasting consequences.
Key Person Protection provides the business with a lump sum payment in the event of the death or critical illness of the key people covered, enabling the business to alleviate the financial impact of such an event. With such a timely injection of funds, the business will be able to cover the additional costs incurred by the need to recruit and train replacement staff or hire temporary employees, plus any financial losses suffered as the result of cancelled contracts or reduced productivity can be mitigated against.
Hence, if your business has one or more employees who are vital to its continued success, then key person protection insurance is a way of protecting your business against the sudden loss of that important person.
How does Keyman Insurance work?
Key Person Protection insurance protects a business against the detrimental effect that can be caused by the sudden loss of a key member of staff through death or critical illness (if selected), who is fundamental to the success of the business. Although the insurance policy is taken out in relation to an employee, it is taken out by the business itself, hence the premiums are paid for by the company.
In the event of the death, or critical illness of the insured employee, the business will then receive a lump sum payment to utilise as it wishes. Spectrum FA have much experience in arranging Key Person Protection, having already advised many different types of businesses. Regardless of the size of your business or the industry you are in, our specialist business protection advisors will be able to provide you with the correct advice and level of cover for your needs.
Why have Keyman Insurance?
Many business owners agree that the loss of a key person can have dire consequences for their business, yet some of them do not have any cover in place although they admit they would cease trading within one year if they lost one of their key people through death or a critical illness.
How would your business cope with the loss of an owner or key employee? If you have someone who is fundamental to the running of your business, then it is crucial that you consider how you would continue trading if they were to suddenly die or suffer a critical illness. To determine whether or not your business has a key person, without whom your company would struggle to continue operating, please ask yourself the following questions;
- Is that person irreplaceable i.e. do they have skills or experience unique to them?
- Does the person contribute significantly to the running of your business?
- Does the person contribute significantly to the profitability of your business?
- Do any of your contracts rely solely on the presence of that person?
- Might some of your crucial business contacts leave if that person is no longer with your business?
Are there any financial (e.g. loans) or other obligations (e.g. investors) outstanding that your company would not be able to fulfil without that person?
If the answer is yes to any of the above, then you may wish consider Key Person Protection Insurance to make sure your business is safeguarded against any such loss. With key person protection, the business will receive a lump sum payment if your key person dies or is diagnosed with a critical illness (if selected).
Why use Spectrum FA to arrange Keyman Insurance Protection?
Spectrum FA specialise in business protection and are experts at advising on key person protection insurance for your specific business requirements. If you would like to find out more, then you can get in touch with Spectrum FA to arrange a free, no obligation review. You can contact us by email at email@example.com, by phone on 01279 315 013 or by using the contact form on the website.
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