Key Person Protection

Many small and medium-sized businesses have one or two key people who are integral to the running of the business.

Business continuity, key person protection, locum cover or business overheads insurance.

Call it what you will, if a main income earner or key individual is incapacitated due to illness or injury, your business will need funds to ensure the bills are paid and the business remains viable.

A key person policy will pay a monthly benefit directly into the business in the event a key person is unable to work. These funds can be used to source and pay for a replacement person or locum, to cover fixed costs and overheads, or to provide a cash injection to keep the business cash flow positive and solvent.

To determine if your business needs key person protection, ask yourself the following:

• Does the company function without you or a key person? How well?
• What percentage of the gross profit is attributable to you or your key person?
• Will money make a difference in keeping the company running in your (or their) absence? This could be by covering overheads during a period of reduced profitability or by paying someone else to do your (their) role or a supporting role for a time.

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