Protecting your most valuable business asset
Who is a key person?
Key person insurance will protect your business from the loss of individuals whose capital, knowledge, client base or experience are vital to the company’s success. This can include a director or specialised employee.
A good way to understand whether someone is a key person to your business is to imagine what it would be like without them around. Without the person would either of the below occur:
- the profitability of the business will suffer, and/or
- the value of the business will drop dramatically.
If the answer is yes, chances are, they are key to your business. Examples of key people include:
Sales Director
Controlling Director
The Founder
Researcher
A sales director with vulnerable contacts which, together with the business they provide, could be lost if he or she died.
A controlling director who has personally guaranteed loans made to a company by, for example, a bank. In these cases the bank may insist on life insurance as a condition of the loan.
The founder of a small company who may have built it up from nothing and who still provides most of the impetus. In this case the company may not be able to survive after his or her death.
A researcher vital to the development of a new product because of their personal expertise, the loss of which might make it impossible to launch the product.
Sales Director
A sales director with vulnerable contacts which, together with the business they provide, could be lost if he or she died.
Controlling Director
A controlling director who has personally guaranteed loans made to a company by, for example, a bank. In these cases the bank may insist on life insurance as a condition of the loan.
The Founder
The founder of a small company who may have built it up from nothing and who still provides most of the impetus. In this case the company may not be able to survive after his or her death.
Researcher
A researcher vital to the development of a new product because of their personal expertise, the loss of which might make it impossible to launch the product.
Tribel’s Key person Protection Insurance Plan
In simple terms, the business takes out an insurance policy (e.g. death, total and permanent disablement and trauma cover) on the key person. If a claim is made, the business receives funds to cover the expenses of replacing the key employee (e.g. recruitment and training).
Key person protection may be for:
- a revenue purpose – to protect a business against lost revenue and increased business costs in the event of the loss of a person who makes a significant contribution towards the profitability of the business, and
- a capital purpose – to protect a business through the provision of capital in the event of the loss of a person who makes a significant contribution towards the value of that business.
Want more information? Download our brochure on our Key Person Protection or get in touch with us to discuss.