Most companies have that indispensable person who drives the company. It could be the founder, the CEO or that incredible salesperson who’s the company’s biggest rainmaker. Now imagine if the company lost its star player. What happens then? Key Person Insurance makes sure you never have to face that situation.

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What is Key Person Insurance?

Key Person Insurance is a life insurance policy taken out by a company against the death of one of their key employees. In a small company, this could be the owner/founder or any critical employee, without whom the company would be crippled and possibly face bankruptcy. For larger companies, the key persons range from executives to any employee who plays a pivotal role in the company’s growth. Their absence would result in a serious loss of revenue and valuable time.

[Related: Why SMEs need to take insurance seriously]

Why do you need Key Person Insurance?

By taking out a Key Person Insurance Policy on your key employees, you are safeguarding your company against any unforeseen tragedy. The existence of any insurance plan is to protect you when you need it most. So why not protect your business the same way you protect your health, life or assets?

What are the benefits of Key Person Insurance?

The number one benefit of Key Person Insurance is continuity for your executives, customers and creditors. In the event you lose one of your key persons, your business will continue. The compensation your company will receive from the policy will sufficiently cover the lost revenue and time it will take to recruit/train a replacement. Another benefit lies in the actual coverage itself. This is regarded as a tax-free, business asset and can prove favorable with banks and commercial lenders. A third benefit to taking out a Key Person Insurance Policy is the cementing of a relationship between the company and that individual, effectively insuring his/her loyalty and dedication to the company. A final benefit is the cash value of the policy itself, which may be available to the company to withdraw or borrow against.

[Related: New rules don’t have to break the bank!]

Big or small, every company depends on certain individuals to keep the ideas flowing, the wheels turning and the company moving forward. Who are the key people in your company? What would happen to the company if you suddenly lost them? Ask us about Key Person Insurance and make sure everything continues business as usual.

David Noakes is currently the Head of Non-Medical at Lifecare International where he manages a department of specialists for Lifecare International whose services cover all aspects of insurance and financial services.