Keyman Insurance

Many business owners insure a variety of things including -

• office premises
• cars
• office equipment
• public liability

What many overlook is the importance of key people within their business.

This becomes even more critical when considering small business (or family run businesses), that have less than five members of staff.

If a long term illness or even death was to happen to one of these members of staff, what impact would it have on the business?

What does Keyman Insurance cover me for?

A keyman insurance policy provides a cash lump sum that is made available in the event of a long term illness or the death of a designated “key person”. The idea of the cash lump sum is to provide financial protection to the business due to the loss of this person for a prolonged period of time. The cash doesn’t replace the individual however, it can buy time to find a replacement, cover the cost of temporary staff to cover the loss of the individual, to cover a loss of profits or just simply to provide a cash injection. The categories that the insurance covers are:

• Business Recovery - The insurance pays out to ensure the business is able to continue trading and recover from the loss / long term absence of a key person. This can sometimes involve a replacement for the key person or the training of an existing member staff to fulfil the role of the insured person.
• Profit Protection - The loss of a key person can often have an adverse effect on the profitability of a company. Orders may be lost as this person had the relationships with the clients, or sales may fall as this person was the one who went out looking for new business. This policy can be used to cover the loss of expected profits from the prolonged absence / permanent absence of the key person.
• Partnership / Shareholder Protection - The insurance can be used to protect the interests of the partnership or the shareholders.
• Protection for guarantees - The policy can also be used to cover anyone involved with guaranteeing business loans or banking facilities.

Who would be classed as a key person?

• A director, business owner, shareholder or partner in the firm.
• Senior Managers in specialist areas such as Sales, Operation, Technical Development – or any role whereby the individuals knowledge is too specialised for others to know how to run that department.
• The people who drive the business forward.
• The people with the creative ideas that lead to new business opportunities for the company.
• People who if lost would see a direct impact on the profitability of the business, or even the survival of the business.

How do I go about arranging cover?

If you know what cover you require you can download an illustration request form below. Or, contact us by completing the enquiry form below, one of our advisers will contact you to discuss your requirements. Alternatively you can contact us on 01274 516900.

Click here to download the illustration request form.

For a premium quotation please complete below;