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Many businesses recognise the need to insure their company property, equipment and fixed assets.
However, they continually overlook their most important assets – the people who drive the business.
Aberdein Considine Wealth offers impartial advice on the best key person insurance policy for you and your organisation.
What is key person insurance and do I need it?
If you own a business then yes, ideally, you should have key person insurance. Your staff are your greatest asset and you need to be sure that – if the worst happened and an important person was no longer around – your company could cope with the change.
Key person insurance is a policy taken out by a business to insure their most valuable employees. Think of it as life and critical illness cover for those who are crucial to your success – whether that’s the managing director, your best sales person, or someone with a specialist skill set.
If any of these key people were to suddenly die or fall ill, a key person insurance policy will protect your business against the financial repercussions. A lump sum is paid-out directly to the business and this can be used to cover the cost of any profit losses, replacement staff, or loan repayments.
What does key person insurance cover?
Primarily, a key person insurance policy provides cover for death. It will pay-out for a critical illness or disability, which prevents your employee from working.
In some cases, with the addition of an ‘income protection’ clause, it may even cover the cost of temporary staff – who are needed due to long-term sickness absence.
Each policy will have a slightly different definition of a ‘key person’. However, generally speaking, key person insurance can cover anyone who is essential to the financial success of your company.