As a businessman you might have public liability insurance and
you insure your buildings, stock and vehicles. You may even have
professional indemnity insurance and legal cost insurance. Is
that all? What about your other primary assets - your key staff?
Key staff represent the heart of every businesses but no more so
than the UK's 3.9 million small, often family, businesses that
have up to 4 employees. Prolonged absence through serious
illness or even death can be terminal for some of these
enterprises. The risks are the same for limited companies, a
partnerships and sole traders.
In this context Keyman Insurance is a must. Keyman Insurance
represents a group of insurance plans all designed to
financially protect business from the affects of prolonged
illness or even death of staff who are central to the prosperity
of the business. The insurance can't replace people but it can
provide cash to buy time and cover the costs of temporary staff,
recruitment, loss of profits or provide a cash injection.
The insurance falls into four categories - insurance to help
your business recover during the extended period when your key
personnel are unable to work or to train or recruit a
replacement, insurance to protect profits, insurance to protect
shareholders or partnership interests, and insurance for anyone
involved in guaranteeing businesses loans or banking facilities.
Keyman Insurance on those who are central to your business. Who
are your key people? They are the ones who steer, create and
drive your business. The people without whom your business would
lose sales and profits or without whom even the basic viability
of your business would be shaken. Look at the Directors,
Partners, owners and beyond. Consider the roles of senior
managers in sales, technical development and operations - the
roles will change in every business but the candidates are sure
to jump out at you.
Insuring these people will provide the extra cash needed to take
on temporary staff or recruit and train a replacement.
Keyman Insurance to protect your Profits. The effect of losing
key staff goes well beyond simply the cost of their salaries and
the cost of replacement. As they're central to the businesses
prosperity, their loss will knock on to the bottom line. You can
insure for loss of profits too!
Keyman Insurance to protect Shareholders or Partners. Here we
are talking about insurance to protect interests in the event of
long-term illness or death. Families may want to sell their
stake in the business but the remaining members in the business
may not want those stakes held by newcomers. Keyman insurance
schemes can be implemented which provide the necessary finance
to buy the shares from the original shareholders or their
estate.
Keyman Insurance insuring those who provide personal guarantees.
When a business takes out a loan or raises bank finance the
lender is quite likely to require a personal guarantee or a
charge on their personal property. This especially applies to
small and new businesses. So what happens if these guarantors
become seriously ill or die? The lenders may well be in a
position to call in the loan. What happens then? Again, Keyman
Insurance is the answer. Insurance can be structured to pay-off
the loan and thus free the business and the guarantor's family,
from major worry.
Most of the UK's leading insurance companies offer Keyman
Insurance as a development of their Life and Critical Illness
Insurance interests. They have all the necessary paperwork
available to implement the cover you need and ensure the taxman
is kept at bay.
So, can your business afford to ignore Keyman Insurance? You'll
be either a brave or foolish man to say NO!
About the author:
Michael is an exclusive financial writer who writes articles
primarily about UK family finance for
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