Business Protection

The loss of a key person can put immense pressure on remaining owners and senior directors. Apart from increased workloads and potential loss of profits, there may well be the added burden of financial commitments such as outstanding business loans.

Lenders usually require this cover and directors may have given personal guarantees – often using their residential home as security – so there is the added need to ensure that dependants of key people are protected.

Directors may also have made loans to the company themselves, either by cash injection or by leaving salary, bonus or dividends in the business. Known as director loan accounts, these become repayable to the estate of a deceased person and need to be included in the sum assured. In a partnership there may be similar loan accounts owed to individual partners and these need to be covered in the same way. Even in the event of a critical illness, the repayment of such a loan would give the key person involved much needed personal financial security.

A key person can be anyone in your business that is critical to the ongoing success of that business. It can often be a senior manager or director, but could equally be someone whose knowledge or skills are critical to the ongoing success of the business. Losing such key people through unexpected death or critical illness could also have serious consequences for the business itself, and keyperson cover provides a lump sum to the business, to cover the cost of recruiting and training a suitable replacement.