What is Key Person Insurance?
Key person insurance (also known as keyman insurance) is taken out by a business to compensate that business for financial losses that would arise from the death or extended incapacity of an important member of the business. The insurance payout is a lump sum and is used to offset the costs (such as recruiting a successor) and losses (such as a decreased ability to transact business) which the business is likely to suffer in the event of the loss of a key person.
Who can be a key person?
A key person can be anyone directly associated with the business whose loss can cause financial strain to the business. For example, the person could be a director of the company, a partner, a key sales person, key project manager, or someone with specific skills or knowledge which is especially valuable to the company.
The most valuable resource of any business is its staff. Loss of key staff can affect every aspect of a business – revenue, profit, goodwill and ultimately the value of your business.
This means that most small to medium businesses are carrying significant financial risk should the unexpected happen to one of their key people.
The big question you have to ask yourself is;
Would your business be able to maintain its revenues and profits if one of its key people died or couldn’t work for an extended period due to a serious illness or accident?
If your answer to this question is no, you need to consider transferring that financial risk to an insurance company. Having over 20 years experience in financial planning and also seeing over $30 million paid out in claims, Invest4life can help you do that, along with answering any questions you have about key person insurance, and then calculating how much key person insurance you need to safeguard your business in the event something should happen to one of your key people. We can also use our experience to ‘broker’ the major insurers and find you the right cover at a competitive price.
Contact Ken and his team at Invest4life now to ensure your Company’s financial stability and security.