BUSINESS PLANNING
What is key person insurance?
Integral to the business's core operations
A key individual can be anyone whose role is integral to the business’s core operations and financial success. This includes directors, employees, or personnel whose expertise, knowledge, and experience directly influence the company’s revenue. Their responsibilities might encompass managing loans, affecting sales, or being pivotal in strategic planning.
Eligibility and timing for key person insurance
Key person insurance is accessible to any business owner, including directors of limited companies, with the consensus of the individual covered under the policy. A financial association with the key individual is a prerequisite. There’s no prescribed timing for growing businesses to procure key person insurance.
While startups may rely heavily on a few individuals, larger enterprises might be able to manage personnel losses without severe consequences. Nonetheless, losing a key individual could lead to significant financial distress for established firms with substantial overheads. This underscores the value of key person insurance as a safety net for businesses across the spectrum.
Contemplating adverse scenarios is unpleasant but necessary
A key team member is necessary to maintain a business, leading to decreased sales and profits and increased burdens on remaining staff. Key person insurance aims to mitigate these risks by providing a financial payout upon the loss of the insured key person. This compensation aids in offsetting revenue losses and covers expenses related to recruiting or training a successor.
Scope of protection offered by key person insurance
The financial support extended through key person insurance can alleviate several critical challenges faced by a business upon the loss of a key individual:
- Mitigation of profit losses
- Recruitment or training of replacements
- Preservation of vital personal or business contacts
- Maintenance of goodwill, essential for capital acquisition or investor attraction
- Sustaining confidence among customers and suppliers
- Settlement of outstanding loans
Ready to discuss how you secure and protect your business’s future?
At Roxburgh Financial Services, our highly experienced team is dedicated to advising and supporting you in setting up protection that aligns with your business’s financial obligations and goals. Protect your business’s future today and ensure your company remains robust and capable of meeting its financial obligations, even in adversity.
Contact Roxburgh Financial Services to discuss how we can support your business and provide ultimate peace of mind for you, your staff, and your stakeholders. Secure your business’s financial lifeline if you lose a key employee.