Why is it important to consider Key Person Insurance for your business?

The pandemic has had a massive effect on lives across the world. In particular, the leisure and tourism sector has coped with businesses being closed for large parts of the last 18 months. The landscape for the industry is looking better with the vaccine roll out, so now might be a good time to review your own position and the protections that you have in place for your family and your business.

The tourism industry in the South West is responsible for over 200,000 jobs*

You can insure virtually anything that is valuable to you – your life, your home, your pets and even your phone. But many people forget to consider what would happen to their business if they or one of their key employees die or contract a life-threatening illness.

52% of small businesses believe that they would cease trading within a year should one of their key people die or contract a serious illness*

A Key Person Insurance policy can be taken out to protect the firm against this scenario. The policy is paid for by the business and used to insure a key person within the firm. If a key employee dies, the policy provides funds to the business.

51% of companies have debt which is not protected by an insurance policy*

The proceeds can be used for a variety of reasons: to repay a bank loan, to protect against loss of profit attributed to the key individual or to provide funds for trading whilst a replacement is found.

63% of businesses said the death of an owner would have the biggest impact on the business, but 40% have no continuity plan in place*

Key Person Insurance can be introduced alongside other protections and legal agreements to ensure you give the business the best possible chance of carrying on in the event of an untimely death. Many smaller businesses are dependent on a few specialist individuals to make sure the business functions profitably. A Key Person Insurance policy is designed to protect your business.

Does your business have any key individuals whose absence would affect the successful running and profits?

Taking action now could protect your business should the worst happen during the remainder of this pandemic or any other unforeseen event that could undermine the years of hard work you have put into establishing and making your business a success.

If you would like to discuss the above and how you could protect your business, please then please speak to your usual PKF Francis Clark contact.

*All stats from Legal & General State of the Nation SME Report October 2019