Key Person Insurance? What if a Key Staff Member Cannot Work?

Published / Last Updated on 15/03/2024

Key Person Insurance

  • Are you a business owner?
  • Does your business rely on the owner/manager/directors or partners for revenue?
  • Does your business have key personnel that it could not function without?
  • What if the keyperson were to die or be off long-term sick?
  • Would revenue and profits fall without that keyperson?
  • How long would it take you to recruit and replace the keyperson? 
  • How much would it cost to recruit the replacement either temporarily or permanently?
  • How long would it take for the business to recover from the loss during the transition in of the replacement?

So many questions and such a simple answer:

  • Key person Life and Critical Illness insurance (a lump sum paid out to assist the business on key personnel death or serious illness).
  • Key person Permanent Health Insurance (a regular income paid out to assist the business on key personnel being off sick short-term e.g.  6 months, 1 year and 2 years).

Key person insurance is an often-overlooked area in a business that could be critical to the survival and continuity of the business. 

  • You insure your premises to ensure continuity.
  • You insure your office equipment or plant and machinery to ensure continuity.
  • You insure your company cars, vans, and trucks to ensure continuity.
  • What about key people and income/profits?

If you pay more in insurance premiums on premises, liabilities, and equipment than you do on your key people then perhaps you need to think again.

Keyperson Insurance Calculator

We have built a simple to use key person value calculator to help you work out the financial impact on the business should you lose a key person.  This proves ‘insurable interest’ of the business in the key individual is based upon:

  • Individual salary as a % of total payroll.
  • Profits/turnover.
  • Additional costs for recruitment of a replacement
  • Time it would take for the business to recover.

Try our key person insurance calculator: Key Person

Talk to us about key people, impact on your business and how to protect your business with low-cost insurance.

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