And how can Key Person Insurance help soften the blow?

It took blood, sweat and tears to make your business what it is today. Whether it was just you or a group effort, those experiences and the knowledge gained are the secrets to your success and the foundation for future growth.

So, what if an unexpected death or illness puts everything you’ve created at risk?

Your CFO or any important person in your business could die at any time. It’s brutal but also a fact of life. Incapacitating illness is another threat. Approximately 1 in 5 men and 1 in 6 women will suffer a long-term illness in their lifetime, with the average age for critical illness claims currently sitting at just 47 years old.

While nobody wants to think about such things, not preparing for them could cost you your business.

Beyond the immediate emotional toll of losing a key member of your team, your company will also suffer. Depending on the role of the person you’ve lost, the negative impact could be wide-reaching and touch many aspects of the business.

Losing a company MVP can have a range of negative impacts:

• Operational: Those with unique skills, knowledge, or relationships are critical to the daily running of your business. Their departure could lead to immediate disruptions in workflow, project management and client relations.

• Financial: The loss of a key person can result in immediate financial challenges. This includes the loss of revenue generated by that individual, increased costs due to hiring and training a replacement and potential contractual penalties or loss of business deals.

• Emotional: The departure of a key employee can affect the morale of the remaining staff. It may lead to uncertainty, reduced motivation and lower productivity as employees adjust to the change and potentially take on additional responsibilities.

• Institutional: Key people often hold a significant amount of institutional knowledge and expertise. Their loss can mean the disappearance of valuable insights about the company’s processes, culture, client relationships and strategic plans.

• Reputational: The departure of a key individual, especially if unexpected or not managed well, can harm the company’s reputation. It may raise concerns among clients, investors, and partners about the stability and future prospects of the business.

With all those potential issues at stake, doesn’t it make sense to plan ahead?

We hope you’ll never have to use Key Person Insurance but, should you need to, it could be the difference between survival and shutting your business for good. For those employing staff, the knock-on effects of losing a key person spread even wider.

For small businesses, the statistics regarding the loss of a key person make for grim reading:

• 59% of SMEs would cease trading within 12 months of losing a key person, and 1 in 4 would have to close immediately.

• Of the 50% of small businesses that fail within the first five years of operation, 42% cite the unexpected loss of a key person as the primary reason.

• The average cost of replacing a key person is equal to six times the key person’s salary.

With Key Person Insurance, you can mitigate these risks.

Essentially a life insurance policy for essential members of your business, Key Person Insurance provides financial protection if those insured can no longer work.

Especially important for small businesses where key people play a significant role, Key Person Insurance pays a lump sum to the company, which can be used to cover a range of costs. This could include finding and training a replacement or compensating for any financial losses that the company may incur as a result of the key employee’s absence. The lump sum could also be used to pay off overdrafts and loan repayments.

But the money doesn’t have to be used for business purposes. You can also use some of the lump sum to support your employee and their family during a period of terminal or critical illness.

Whichever way you look at it, having a Key Person Insurance safety net is an investment worth making. Should the worst happen, a lack of cover will only intensify your loss and put your business at risk.

Deciding on the right Key Person Insurance policy for your needs can be a tricky business. Not only do you need to determine the right level of cover and what triggers a payout, but there are also tax efficiencies available to your business when managed correctly. Our expert insurance advisors have vast experience dealing with such decisions for companies like yours. They know the right questions to ask and which providers to choose for the best rates and coverage.

Don’t wait until it’s too late to find out who your most important employees are. Get in touch with one of our expert advisors and achieve peace of mind by organising Key Person Insurance for your company’s most valuable individuals today.

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