ABOUT KEY PERSON INSURANCE

Why is it important to have key person insurance?

The most important asset in any business is its people. The ongoing profitability and sustainability and, as a result, the capital value of your business are largely reliant on the input of the key employees in the business. The loss of a key person could therefore pose a great risk to the business, and even lead to eventual ruin.

What is a key person

A key person is someone whose absence through death or disability will have a material effect on the future of the business. If the key person is lost to the business as a result of death or disability, then the business could suffer a direct loss – whether it’s decreased sales, the high cost of replacing a skilled employee, or the loss of profits or sales while a new replacement is being trained.

HOW IT WORKS

Key person insurance explained

Key person insurance is a simple, cost-effective solution that provides financial security and certainty for your business in the event of the death or disability of a key person. It allows you, as the business owner, to insure the life of a key person to cover the business against the expensive replacement costs, or to provide cover against a potential loss. The business has the option to insure itself against this risk in a tax-effective manner.

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