Key Person Insurance is effectively insurance on the ‘key person’ in a business. This might be the business owner, founder or an employee your company simply can’t do without.
In the event that their insured key person suffers a critical illness, is permanently disabled or dies, the policy will provide a lump sum benefit. Lump sum benefit can be used for a variety of means, including:
Providing a buffer against loss of profits
Paying for recruitment and training of a replacement
Repaying outstanding loans
Loss of important personal or business contacts
Loss of confidence from suppliers and customers
Difficulties in raising finance for new developments
Loss of detailed knowledge of the business’ processes and systems
Winding down a company in an orderly fashion.
A key person insurance policy is owned by the business and both small and large companies can consider key person insurance to protect their business interests.