Why SMEs need Key Person Insurance
To protect the business from losses due to the untimely death of a key employee
Every business has key players who drive growth and success. Planning for what you’d do without them is an important part of your business continuation strategy – whether you’re just starting out or already expanding operations.
Is there a key employee in your business who, in the event of their untimely death, can create a major disruption that can be very costly for the business?
Identifying your Key People
- Unique and expert knowledge or skills that could not be completely transferred to another employee
- Exclusive network and relationships with partners you do business with (e.g. suppliers, investors, creditors, brokers, etc.)
Should this key employee pass away, the business will suffer some financial losses related to:
- Sourcing & training a replacement
- The learning curve of the replacement
- Rebuilding relationships with key partners of the business
With key person insurance, you can transfer the risk of losing a key employee. The life insurance proceeds can help ensure there is liquid capital to allow the company to pay off creditors and cover the cost to the business of the key person’s loss. The availability of cash, along with a sound transition plan can help reassure employees, creditors, suppliers, and customers.