It is common business practice to insure vehicles and equipment. Yet, these are not your business’ most valuable asset – all businesses, regardless of their size, have key people – people whose contributions have a significant impact on revenue and profitability.
The loss of a key person is difficult for any business, but it is especially difficult for small businesses that rely on the contributions of less people. In small businesses, each employee has a direct effect on revenue as there are fewer people talking to customers, creating products and performing services.
WE WILL WORK WITH YOU TO DEVELOP A SOLUTION THAT MEETS YOUR NEEDS
We will ask you:
- Who is missed most when on holiday?
- Would the business miss them if they were temporarily or permanently disabled?
- How long would it take to replace them, how could that be funded?
Although a business can’t prevent the sudden loss of key employees, it can be compensated through key person insurance. The proceeds can be used to recruit, hire, and train a replacement, restore lost profits, and reassure customers that business operations will continue.
The cost of Key Person Insurance may be tax deductible depending on the purpose of the cover.
You and your business may be in need for this type of cover. Evaluating whether this policy is necessary will provide you with peace of mind.
WE WILL HELP YOU DO THE ANALYSIS AND CONSIDER WHAT YOU WOULD DO IF CERTAIN EMPLOYEES ARE NOT ABLE TO WORK.
Caroline is a dentist employing a dental technician and a receptionist in a sole-practitioner.
While attending a wedding, she slipped on the grass leading to the reception centre, breaking her hip and causing back pain.
Caroline had ‘key person insurance’ and ‘business expense insurance’ which allowed her to pay herself, her rent, staff and other business bills for the three months she was off work full time, and when she was working part-time attending rehabilitation for almost year.
Without these insurances, she would have had to close the business. It may be difficult for her to start up the business once she is fully recovered as she lost her income and may not have enough savings in place to pay for the ongoing expenses.