Key Person Cover is a type of insurance that offers financial protection if a crucial person in a business cannot work or suffers a significant health issue. The coverage can provide either a monthly payment or a lump sum amount, and it includes various insurance benefits such as life, trauma, permanent disablement, and business income protection. Business income protection, also known as business disability cover, is often used when insuring key team members essential to the business's operations.
If you're a business owner, it's essential to evaluate the potential impact if you or other key team members are unable to work for a short or extended period. You should also consider the amount of emergency capital you have available. Key individuals may include yourself, a sales manager, a site manager, an operations manager, a lead tradesperson, or anyone else you deem critical to the business.
The amount of coverage you need will depend on the costs associated with replacing the key person or the percentage of business turnover they are responsible for. In most cases, your business will need to show a reasonable amount of gross profit from the previous two financial years to justify the coverage to the insurer. If you're a new business owner, Key Person Cover options are tailored for new businesses and available through reputable life insurers.
If you're worried about the financial vulnerability of your business in the event that you or other key team members are unable to work, we recommend consulting an experienced business insurance adviser. They can provide free consultations and business risk assessments with no obligation.
Please note that this article is intended for informational purposes only and should not be construed as financial advice. It is always advisable to consult with a qualified financial professional before making any financial decisions based on your specific circumstances.