Plan Insurance Blog

Are You at Risk Without Key Person Insurance?

Every employee in any company has an important role to play to ensure the day-to-day function of a successful business. However, there are always a select few individuals in any company where if the worst were to happen to them, the business could suffer detrimental losses.

In simple terms, key person insurance exists to financially protect a business in the event of death, critical illness, or terminal illness of a key individual.

If a key-person in your business were to pass away, this type of policy would provide a cash injection into the business to ensure the company stays afloat in the absence of this key person or people.

At Plan we partner with Caspian Insurance to offer an extensive range of Business Protection solutions. Just fill in the short call back form, and Caspian will be in contact to arrange your insurance.

What is a key person?

A key person is defined as someone who the business would struggle without if something were to happen to them. For smaller businesses, this is typically the founder or director. For medium or larger-sized businesses, this could potentially be any of the employees who you consider to be key people in the company.

However, it is worth noting that, regardless of the company size, anybody could be considered a key person in terms of key person insurance. Their job role or level of seniority is irrelevant as key person insurance is advised on the basis of who your business would struggle without if they were to pass away or become critically ill. This could be someone with first-rate industry knowledge, someone who brings in a large revenue, or an individual with irreplaceable experience.

How does key person insurance work?

This type of insurance policy is not paid by the people or person it covers but rather by the business itself. This is because if the policy were to payout, the money would go straight to the business, acting as cash injection in order to keep the company afloat during this in-between period. The payout from a key person policy could allow time for the business to recover and manage financially until they can find a replacement.

Why would I need key person insurance?

None of us know what is around the corner and whilst this is a scary thought, having a key person insurance policy in place could alleviate some of the worries and stresses you would suffer if something were to happen to a key person in your business. The business protection specialists at Caspian often speak to many small and new businesses regarding key person insurance as these types of businesses will likely rely on a limited group of people.

As with many life insurance policies, one of the most appealing aspects of having this type of financial protection in place is the peace of mind you would get. Something happening to an integral employee in your company could be detrimental to the survival of your business, whether this be loss of profits or the remaining employees becoming overworked. Having a key person insurance policy in place would ensure peace of mind that if in the event of losing a key person, your business would not suffer any notable financial losses.

At Caspian Insurance, their business protection specialists provide free and impartial advice surrounding the financial protection of your business. They will look at a multitude of factors concerning your business, whether it is small or large, in order to recommend the most tailored policy possible.

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