Did you know that according to the Office of National Statistics, 95.6% of small businesses, last year, within the UK were registered with fewer than 10 people in the office? What would you do if a key person(s), either the founder, owner or key employee within your business was unfortunately diagnosed with a critical illness or was involved in an accident?
What is Key Person Insurance?
Many small and medium businesses put in place Key Person Insurance to safeguard themselves from any financial injury if a key employee within their business has passed away or is diagnosed with a terminal or critical illness.
This insurance will only cover a key person(s) within the workplace, please do not confuse this policy with personal life insurance (for family members).
Why should I take out Key Person Insurance?
In a business, we all rely on a key person(s) who benefit the business, whether it be through sales, income or profit. These people are considered vital to the business, they help the development of the business and drive the business towards success. These individuals might have specific sets of skills and knowledge that would be hard to replace.
Research conducted by Legal and General back in 2016 found that 46% of businesses would fold if a key person fell ill or died. Therefore, taking out this policy is considered a lifeline, the insurance will cover the businesses expenses until a replacement has been found, pay off any existing debts or money for investors. The insurance will also compensate any loss in profits or revenue to prevent the business going into bankruptcy.
If you are looking to take out key person insurance or would like some advice on the policy, we are a team of experienced advisors and will ensure we understand your business and the key person you are insuring. For further information contact First Financial Solutions on 01639 262222 or contact us via email.
*Tax treatment varies according to individual circumstances and is subject to change.