Key Person Protection can help protect any business should one of its key people, someone creatively, technically, or strategically vital, were to die or fall critically ill.
In almost every business, there will be a number of key individuals whose skill, knowledge, experience or leadership contributes to the continued financial success of the business. Without those people, it is likely that the business would be severely affected. The other people running the business may face challenges, like trying to replace the key person and the costs associated with that, dealing with the implication of losing contacts, experiencing a fall in profits, and having to repay loans.
With that in mind, it is worth considering Key Person Protection for any person who is central to the operation of the business. Whether that person provides expertise, contacts or other assets, their loss could be very damaging. In some cases, this could even lead to the business failing or being unable to trade. Examples of key people may include: Partners, Business Owners, Managing Directors, Chairman, Sales Manager and other individuals with specialist skills.
When calculating the appropriate amount of cover needed, a business can use the lump sum in a number of ways including: helping to pay off a loan or overdraft to lessen financial pressure; keeping the business turnover going whether this would directly impact on the profits; paying suppliers; helping to support the Key Person’s family in a time of need; the cost of hiring and employing someone else in the interim and finding a long term replacement.
It is possible for the Key Person Protection policies to qualify as a business expense, providing that the policy follows the “Anderson Principles”; we would be happy to discuss this, and any other questions you may have relating to Key Person Protection with you.