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A Beginner’s Guide To A Key Man Insurance Policy

Key Man Insurance

Most aspects of life can be unpredictable, and unfortunately, the world of work is no exception. That’s why companies need a business contingency plan. One that has carefully planned procedures to help mitigate the negative consequences of unavoidable events that will threaten normal operations. A Key man insurance policy should be part of your contingency plan to ensure continuity during the loss of a key staff member. Insurance like this can help keep the impact on the business low.

What is a key man insurance policy?

A key man insurance policy is a type of business insurance that protects companies against the loss of an important employee through sickness or death. A kind of business life insurance, a policy like this pays out a lump sum to the business to help meet the financial costs of providing temporary cover and finding a replacement member of staff. The financial sum paid out to the business can also help to cover a loss in profits. This may be in the form of lost customers, lost sales or loss of reputation.

What are the benefits of a key man insurance policy?

Key man cover can help to lift the financial burden of replacing a key member of staff during a difficult time. Covering everything from recruitment to loss of major clients, key man insurance is vital to business security. If the business does not have substantial savings to fall back on, this type of policy can help give peace of mind. It will cover the business if they were to lose someone crucial to the success of the business. This doesn’t just include directors, but can also include managers and operations personnel.

Profits are protected

The losses your business would otherwise suffer due to the loss of a key employee, such as a top salesperson or business partner, can be greatly reduced with the lump sum paid out through a key man insurance policy. This means profits are more likely to remain as projected. With key man protection, the competitive edge your company has gained over others can safely continue.

Bolstering company value

A company’s share price will normally drop significantly when times of uncertainty arise. Therefore, business protection insurance can be an important part of keeping your shareholders happy by maintaining your company’s value. Key man insurance offers the kind of protection that can help stabilise the value of your company when dealing with the loss of a key employee.

Ensuring credit remains available

Key man cover can help creditors feel secure that your company will continue to prosper despite difficult circumstances. This means the likelihood of credit lines being closed to you is reduced. You can use key man insurance to provide the guarantee for financial products such as a business loan, and also to clear an outstanding loan while the company goes through this transition.

Boost employee morale

It’s no secret that an employee who feels valued by their company is far more likely to stick around. That’s why business life insurance is a great way to show your staff how vital they are. Having this kind of insurance is also a clear indicator to other employees that the company is secure. Therefore, during times of adversity, your current employees can still feel secure. Life insurance demonstrates that the business is prepared to protect itself and their jobs against unforeseen circumstances. This feeling of security among employees is particularly valuable during times of economic stress. What’s more, life insurance can greatly increase employee retention rates.

At Business Cover Expert we have specialist advisers to help you find the best business life insurance policy tailored to your specific needs and best of all our advice and quotes are completely free.

Check out our Ultimate Guide to Key Man Insurance for more information or speak with an advisor today.

 

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