Here’s why having keyman insurance is so important for you and your business.

Keyman insurance is important for any business. 

It provides financial cover if a key person in the business – like an owner or executive – dies or suffers from a critical illness or disability and can’t continue in the business.

This includes covering any outstanding loans owed by the business, paying any temporary staff wages or paying any recruitment costs.

It’s advised you take out keyman insurance whatever the size of your business.

As a business owner it’ll protect you and your staff in the event of a death, illness or disability of a key person in the company.

Here’s why having keyman insurance is so important for you and your business. 

  1. Cover the loss of a key person 

A key person is anyone whose absence would seriously disrupt the progression of the business. 

This is anyone from the founder to those with a specialist skill set in their department. 

Without keyman insurance, your business could come into a range of financial problems.

Whether it’s the loss of revenue that person would have generated.

Or potentially the loss of relationships with future customers that person would have built.

Although it isn’t the easiest thing to think about, keyman insurance protects you from this turmoil in the event of a death or an illness so critical the key person can no longer work. 

  1. It can protect your finances in the short term

If losing a key person means lost profits, keyman insurance will help cover those costs until you’ve recovered.

It can also be used to pay for wages, replacement staff and even loan repayments owed by the business. 

This will help keep your business afloat during a difficult period. 

An example of this would be covering recruitment costs and paying off outstanding debt.

This limits your amount of outgoings to save as much money as possible when the future of the business is unclear. 

If you don’t have a keyman insurance policy in place, you could have scheduled payments but a lower overall income, causing financial issues. 

  1. Use keyman insurance to cover any outstanding debts

With keyman insurance, any overdrafts and loan repayments are covered.

It guarantees the repayment of loans (depending on the cover you choose) in the event of the death of a key person.

Having this in place will limit the wider impact on the business to prevent closure. 

Any loans taken out to pay for machinery, for example, can be paid off using keyman insurance. 

This makes sure business can carry on without additional outgoings. 

  1. Protect the future of the business

Going through something so difficult as a business as the loss of a key employee could have a huge effect on your staff – particularly the uncertainty about the future. 

The result of this is different for every business, so you’ll want to do what you can to make sure the future of the business is protected. 

With keyman insurance taking care of the money side of things, employees can at least be more reassured that the business’ financial future is secure and their own jobs aren’t immediately at risk.

Within the keyman agreement you can add a ‘buy and sell’ section to transfer the ownership of the business to someone else in the event of a death or critical illness. 

  1. Cover recruitment costs

You might not want to think about replacing someone under such circumstances, especially not immediately after, but the reality is you have to continue doing business.

This involves finding someone new to be a part of that. 

Keyman insurance will cover the cost of a new employee, as well as the process of advertising and interviewing candidates.  

Finding the right cover for your business

Keyman insurance can often be looked over.

It’s needed in case of the death or critical illness/disability of a key person within the business, which isn’t easy to think about. 

With Rigby Financial, you’ll get a dedicated expert to guide you through it all and find the best cover for you. Get in touch now for more information. 

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