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A Beginner’s Guide To Key Man Insurance

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, which has carefully planned procedures to help mitigate the negative consequences of unavoidable events that will threaten normal operations. Key man insurance should be part of your contingency plan to ensure the loss of a key staff member has as little impact on your business as possible.

What is key man insurance?

Key man insurance 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.

What are the benefits of key man insurance

While key man cover is primarily a way of lifting the financial burden of replacing a key member of staff during a difficult time, there are also a number of other ways key man insurance protects your business.

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 though key man insurance. This means profits are more likely to remain as projected with key man protection, and 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 and so 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, even while you are dealing with the loss of a key employee.

Ensuring credit remains available

Business life insurance such as 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, and so business life insurance like key man cover is a great way to show a staff member just how vital they are to everyday operations. Having this kind of insurance is also a clear indicator to other employees that the company is secure even during times of adversity, and that it 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 and 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.


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