When a key person in a business dies or becomes seriously ill it can have a devastating financial effect. This insurance can offer invaluable financial support.
As advisers, we are increasingly working with CLA Members to consider ways that they can look after not only their employees’ healthcare and wellbeing needs but also safeguard their business if a key employee should die or be diagnosed with a serious illness.
This is where Business Protection Insurance can offer invaluable financial support.
Get a QuoteBusiness Protection Insurance, sometimes known as key person insurance, is a type of life insurance that protects your business from the financial fallout caused by the unexpected death or serious illness (when Critical Illness Protection is included in the policy) of a key employee to the business.
Usually, business owners choose to cover those employees with particular skills, expertise or responsibilities. If you are the owner, founder or managing director, you’re likely to be a key person.
In the event of a key person’s death or serious illness (when Critical Illness cover is included), the proceeds from the policy are paid directly to the company, helping you to protect your profits or clear business debt to continue trading as normally as possible or simply provide the necessary funding for you to find a successor.
The amount of cover can typically be linked to a multiple of the key person’s earnings or as a value linked to their contribution to your profits.
When you’re deciding who to cover, it’s useful to ask yourself “what would happen if…?”. You should consider whether you have any key employees that your business simply could not function effectively without.
If you do have employees whose loss would cause severe disruption, or even closure, then Business Protection Insurance is likely to be as essential as they are. It’s an especially important consideration for small to medium sized businesses that often rely on a small and loyal team.
The insurance premium will depend on the employee’s age and health – assuming good health it will be higher for a person aged 60 than it would be for a person aged 40.
Adding Critical Illness cover increases the cost of premiums compared to Life Only cover.
To find out more or to discuss your options in more detail, the expert team at CLA Healthcare are on hand to help.
Call 01274 717361 or email healthcare@cla.org.uk to find out more.
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