Keyperson Protection
If you run a business then you know that the success of your business can be largely influenced by the exceptional contributions of a small number of "KEY" men or women within your company. These "KEY" figures should include people like your fellow directors or business partners. The premature death or long-term disability of these people could ultimately threaten your company's profits or, even worse, could threaten the future existence of your business.
Why is Keyperson protection so important?
Quite simply, if your business partner of fellow director dies, their element of the business, unless specified otherwise, goes to their estate!
What does Keyperson protection cover?
Should one of your "KEY" staff suffer premature death, this is more than likely going to cause an immediate need for a cash injection. This money may be required to cover the immediate loss of turnover. The sudden absence of that key person may result in the cost of recruiting a replacement and the additional cost of training them to be as productive as their predecessor. The same need for cash would apply if that same person suffered a critical illness such as a heart attack, cancer or a stroke. This may not result in their death, but inevitably will mean a lengthy period of absence, if indeed they returned at all.
Keyperson insurance can be taken out to provide this much needed cash injection in the currency you decide for both the aforementioned circumstances.
How much Keyperson protection cover is needed?
There is no simple way to work out this figure. The amount of Keyperson cover is really going to be down to how much you think your turnover would be affected if that person is no longer there. One would have to think about how much it would cost to recruit a replacement. Furthermore, how much would it cost to train that person and how long would it take for them to be as productive as their predecessor. These are the sorts of questions that need to be considered.
Summary of Keyperson protection with financial planning
The premature death or a critical illness of a "KEY" member of your workforce may well put a huge financial strain on the profitability of your business.
* The idea of Keyperson protection is to help safeguard your business in the event of the death or critical illness of a "KEY" person within your company.
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