To
safeguard your business you have probably secured buildings
insurance, machinery or equipment insurance and indemnity or public
liability insurance. You may have covered the tangible assets of your
business, but have you protected the most important assets: the
people that directly contribute to your profits? Are your profits
protected should you lose employees unexpectedly? How will your
business profits be protected if you or your business partner is
taken ill and can’t work?
If you run
your own business, you probably have one or more key employees that
are integral to its success. These are the people who possess the
skills, knowledge, experience or leadership that makes a vital
difference to your bottom line.
Does your
business have a Sales Manager with an established network of contacts
perhaps? Do you have highly skilled or technical staff? What about
you, the director or business owner? Have you
considered what would happen if they suddenly died, or suffered a
critical illness that forced them to be absent from work for a long
period of time? Have you considered the costs and time
implications associated with recruiting a locum or temporary
contractor to fill the gap? What effect will their absence have on
your business’s profits?
If the
unexpected happened before you've had a chance to protect against
such loss, your business would be at risk of collapse.
Q.
What is Key Person Insurance?
Key Person
Insurance is a simple way for businesses making a profit to insure
their business against the losses they might suffer as a result of
the death, disability or critical illness of a key individual.
Q.
My business is very small with fewer than ten staff. Do I need to be
concerned with Key Person Insurance?
Absolutely.
With a small business key people are more likely to be
responsible for a larger proportion of the company’s profits. If
the unexpected were to happen, then the impact for a small business
would be dramatic and could have huge consequences financially.
Q.
My business is larger with more Key People. What should I do?
Large
businesses should also consider Key Person Insurance. FTSE100
companies all insure their key people as part of their business
continuity plan. Even though the impact of one person no longer
coming to work wouldn’t be as financially disastrous for a very
large firm, they still consider it vital to protect their profits.
Q.
Is there any other cover I should be aware of to protect my
business?
Yes. As
part of your business continuity planning you should consider
shareholder protection and loan protection. These provide the
business with cash to buy the shares of a deceased or seriously ill
director, or repay a loan should the bank, for example, recall this
on the death of a director. Whether you are a sole trader,
partnership or a Limited Company, you must ensure that your business
has the correct financial safeguards in place.
_________________________________________________________
With
over 25 years of experience in helping people make their financial
plans, Ewing Associates build strong trusted relationships with our
clients. We offer an expert and friendly financial planning service.
Our
experience covers personal and corporate financial advice. We fully
understand the individual needs of every client and provide a first
class service.
We
will help you understand the numerous financial services available,
tailor the right solution to your specific needs and help make your
money work harder for YOU.
Ewing
Associates’ services include mortgage advice, personal and
corporate financial planning, investment advice and estate planning.
E-mail
andrew@ewingassociates.co.uk or call 01480 357100 for more
information
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