One of the most valuable assets to in your business are your staff, with success or failure often depending on them. Some of these people, because of their specialised knowledge, skills, or contacts are vital to the profitability of the business. They are often referred to as “Key Persons”, as their absence could adversely affect the financial performance of the business, leading to a significant fall in profits, perhaps an inability to repay loans or meet other obligations and, in extreme cases, the collapse of the business.
Whilst the loss of these Key Persons through resignation has hopefully been mitigated by an appropriate notice period and a robust succession plan, what would happen if the employee were to die or become incapacitated by a sudden critical illness?
Just as it is necessary to insure a business against the loss of or damage to physical assets, it is also vital to insure against death of a key person or their loss because of a serious illness or disability.