Running a business comes with several different sources of stress. From managing finances to training staff, there are often a few surprises along the way. The loss or incapacitation of employees central to the success of your business is never pleasant. In addition to the emotional strain, there’s a large amount of financial pressure that accompanies incidences like these. It’s why we strongly advise that all business owners consider key person insurance in order to successfully mitigate their risks, with fewer economic consequences.
For those who aren’t quite sure what this cover offers those who own or run businesses, here’s some more information on this necessary policy.
It falls under assurance
In the insurance realm, it’s common to encounter insurance and assurance. Whilst these are both blanket terms for types of cover, they aren’t one in the same. Insurance policies are those that provide financial compensation and cover for unforeseen events like fires, floods, or losses due to theft. Assurance, on the other hand, provides coverage for events that are of high probability or definite in nature, like a dread disease, disability, and death. Key person insurance is an example of an assurance policy, with death or even incapacitation of important employees being a reality for many businesses.
Why it’s important
Every business has a few employees that it would struggle to function well without. This includes Managing Directors and C.E.Os, who play integral roles in the profitability of the business. With the importance of vital decision makers and role players, comes the risk of their absence through death or incapacitation. With the loss of such important employees, some businesses are forced to find replacements or worse, even close their doors. With a reputable key person insurance policy, you can be compensated for up skilling a suitable replacement, recruiting a new candidate, or in a worst-case scenario, winding up the business.
Choose whom you would like to cover
With this kind of policy, business owners will need to specify whom they would like to include. For this reason, it is wise to sit down with all business partners and discuss who should be covered by a policy like this one. Following this decision, business owners should contact their dedicated broker to start getting the policy particulars in order.
How does it work?
First, this policy will be tailored to suit the needs of your business and its key employees. Should you need to submit a claim, your business will be paid out a lump sum that you can use to act accordingly in the best interests of the company.
Don’t leave your business vulnerable, insure your key persons now
In an unpredictable world, it makes sense to minimise your risk as much as possible. With this in mind, your business interests should be no exception. For more on how this kind of policy could help give you peace of mind, please chat to one of our expert brokers today: 087 724 9390