29 January 2018
Why your business needs keyperson insurance
Have you ever wondered what would happen to your business if a key manager became critically ill or suddenly died?
Sadly – but not that infrequently – these things happen. For many small companies, it can spell the end or the beginning of the end.
It’s not just shock and disruption that causes the problem. It’s the sudden extra demands on everyone’s time and, even more importantly, the pressure on cash flow from all the additional unbudgeted costs ranging from lost orders to temporary arrangements to recruitment fees.
All businesses – companies, partnerships, limited liability partnerships, even sole traders – are likely to have an individual, or a group of individuals, who are fundamental to continuing prosperity.
Yet, while most businesses insure their fixed assets, they seem far less concerned about insuring these crucial human assets who are the real difference between success and failure. Surveys suggest that less than a quarter of businesses have the protection of keyperson insurance.
Keyperson insurance is a simple concept. However, there are various options which allow you to tailor it to your company’s exact needs. With life assurance, critical illness cover, an income protection plan – or a combination of all three – a company can provide for a liberating cash injection (either as a lump sum or an income flow) if a key person has died or succumbs to serious illness. And, you’ll receive this at the very time that securing a bank loan or seeking new share capital is likely to be difficult.
Centor’s expert advice can help you through the options to obtain the most appropriate and cost-effective cover.
- We can help you identify the people you should insure. The lifeblood of the business. Is it the salesperson with the golden touch, or the technical expert without whom product development would grind to a halt, or the director who embodies the vision, drive and goodwill of the business?
- We can then help you determine how much cover you need. We look at it from the point of view of salary, potential lost profit (pre- or post-tax), contribution to turnover or impact on costs to calculate the appropriate sum for you. We will also advise on how to set up life assurance according to the type of organisation.
- Finally, we search the market for the most suitable cover and negotiate the most competitive price.
Once we have selected a policy, the insurer will require a medical questionnaire to give them a fix on the applicant’s age, current medical status, smoking habits, etc. There will also be questions about the business’ hierarchy, financial health and prospects.
Although tax efficiency should never overrule other commercial considerations, we can also help you review the most tax efficient way to both pay premiums and receive the benefits.
Paul Mardlin, Centor’s Employee Benefits Director, says: “Keyperson protection is a vital insurance that a company ignores at its peril. We are proud of our expertise in this field and we would be happy to guide you through your options to ensure you have exactly the right policy in place for your business.”
For more information, get in touch with:
0207 330 8708