Surviving the Loss of a Key Person
Posted by AndrewEarles on Thursday 27th of July 2017.
If something happened to you, your co-owners or employees, could your business survive?
According to research by Legal and General, if a business suffered the loss of a key person:
- 40% of businesses would cease trading in less than a year of the death or serious illness of a key person
- 63% of sole traders would cease to trade immediately
- 46% of new businesses (less than two years old) would cease to trade immediately
The loss of a key person within a small or medium-sized business can cause unexpected costs and disruption. Not only would the business have to fund the cost of recruiting and training a replacement, but it would also risk suffering from a:
- loss of profits
- loss of important business contacts
- loss of knowledge and expertise
- Customers and suppliers losing confidence in the business
Business protection insurance can help mitigate or even avoid these risks altogether
As a business owner, you should know there are three main types of business protection: Key Person Insurance, Shareholder Protection Insurance and Business Loan Protection.
- Key Person Insurance – provides a lump sum to the business on the death of an important member of the business.
- Shareholder Protection Insurance – provides a lump sum that will allow remaining shareholders to buy the shares of a deceased shareholder.
- Business Loan Protection – provides a lump sum to help a business pay any outstanding business loans.
Deciding on the right type of cover depends on the circumstances involved and the events the business wants to insure the key person against.
People are the biggest asset to any business and Business Protection Insurance is designed to keep your business trading should the worst happen.
For further information or advice on setting up a business protection policy please get in touch.