‘52% of businesses would cease trading in under a year if a key person died or became critically ill’reports Legal & General’s ‘State of the Nation’ SME research.
The worrying factor is that in the SME sector only 18% of businesses have insurances to cover their key people, and 40% of businesses have no continuity plan at all, according to the aforementioned report.
Whilst businesses are more aware of protecting certain assets, such as premises, hardware or stock – they don’t often think about their most important assets – their people.
Who is a Key Person?
A key person is someone whose skills, if lost, would have either a direct or indirect impact on a business’s finances. There could be several key people in a business, such as managing director, finance director, head of sales, engineer, etc.
What is Key Person Protection?
A Key Person Protection policy can help protect the profits of a business in the event that a key individual or individuals were to die or become terminally or critically ill. The policy will allow the business to continue operating without financial hardship, while a replacement is found or members of staff trained.