Most businesses insure their plant, stock, and machinery against hazards such as fire and theft against the consequent loss of profits. However there is also a need to insure a company's most vital asset - its key people. These are the people whose specialist knowledge, skills, energy and enterprise are vital to the continuing profitability of the business and whose death or disability may have a dramatic impact on the success of the business.

What happens when your top salesperson has a serious illness? Could you answer the sales calls if your sales manager was unable to work for an extended period of time? What if your IT person wasn't available - would you be able to run your computer network properly?

A personal tragedy need not be a business tragedy. If a crucial member of your staff was injured, diagnosed with a serious illness or died suddenly, a lump sum injection could be the lifeline your business needs in order to do such things as hire a consultant or recruit and train a replacement. Directors could be personally liable if they "cause or allow the business of the company to be carried on in a manner likely to create a risk of serious loss to the company's creditors" Section 135 Companies Act 1993.

Key Person Protection allows you the opportunity to step back and have a think about the decisions you need to make in these situations - without the added stress of financial worries. Key Person Protection can be used to cover the following events that may result from the loss of a key person:

  • Loss of profit
  • Loss of personal contacts and goodwill
  • Decline in turnover
  • Reduction or withdrawal of bank finance and overdrafts
  • Directors often give personal guarantees to meet these commitments; therefore the potential liability extends to personal estates of directors.
  • Loss or reduction of credit arrangements with suppliers
  • Loss of specialist knowledge and expertise
  • Time spent recruiting a replacement and the cost of providing a temporary replacement