Keyperson Protection / Keyman Insurance

Most organisations employ at least one individual who is essential to the company’s success. This person may be a partner, majority stockholder or an individual with expertise that is unmatched throughout the rest of the company.

If this person’s exit from the company is planned, such as retirement or voluntary termination, then you can prepare for the loss and take the necessary precautions to minimise the impact.

However, if the departure is unplanned, then the company may be exposed to financial risks. Consider key person insurance to offset your risk. This insurance solution can provide essential funds to help mitigate the loss of a key person which in turn can be used to replace lost revenue. This may also assist with potential short term solvency problems while the key person is replaced and provide additional peace of mind to the lenders and investors in the company.

Who Needs Key Person Cover?

•          Employees who would be extremely difficult, time-consuming or expensive to replace
•          Highly skilled employees with unique training or skills
•          Employees with exclusive ties to key clients
•          Employees who are company leaders and have irreplaceable knowledge
•          Small business owners who would face financial hardship in losing a key staff member, employee or client

How Does It Work?

•          The employer pays the premiums and serves as the beneficiary in the event of the employee’s death.
•          Money from the policy can be put towards finding, hiring and training a replacement employee, compensation for lost business during the transition and/or financing timely business transactions.
•          Premiums are based on several factors, including the key employee’s age, physical conditions and health history. The amount of cover also affects the premium.

In addition to proper cover, create a business continuity plan that outlines how your business will function if you lose key employees.