Key Man Insurance

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The Importance of your Key Person

Most organisations have at least one person essential to the company’s success. They may be a partner, majority stockholder or someone with expertise that’s unmatched within the business. 

If this person’s exit is planned, such as through retirement or voluntary termination, you can prepare for the loss and take precautions to minimise the impact. However, if it’s unplanned, the company is exposed to financial risks. 

Consider key person insurance to offset your risk. This can protect both your organisation’s solvency if you lose a key person or people without warning, and the investments made by lenders and investors to the company.

 

Who Needs Key Person Cover?

Employees who would be extremely difficult, time-consuming or expensive to replace

Highly skilled employees with unique training or skills

Employees with exclusive ties to key clients, like sport stars

Employees who are company leaders and have irreplaceable knowledge

Small business owners themselves or in cases where the loss of a key staff member would damage or threaten the business

 

How Does It Work?

The employer pays the premiums and serves as the beneficiary in the event of the employee’s death.

    money from the policy can be put towards finding, hiring and training a replacement employee, compensation for lost business during the transition and/or financing timely business transactions, or even closing down the business in an orderly manner.

Premiums are based on several factors, including the key employee’s age, physical conditions and health history. The amount of cover also affects the premium.

If your company only employs you, Prima can advise on the best approach to protection. Personal life insurance may be more appropriate if the main people depending on your company’s continuing viability and revenue are your spouse and/or children, not employees

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