In many ways, this can be quite an unsettling thought, that without the contribution of several (or sometimes even just one) hard working, talented and visionary staff, the enterprise would not have succeeded.
This makes insuring key staff members, or protecting the business if anything happened to them, an essential task.
Key Person Protection Insurance is a policy designed to pay out if the business loses its most essential component; it’s best people.
If you are worried about ‘insuring my business employees’, read on to help answer your questions.
How KPP Works
KPP is essentially a life insurance policy that pays the business, not the individual, if they are taken seriously ill or die.
The policy does not cover other causes of loss of personnel (i.e. leaving the business for another employer or being fired) it simply covers the things that are beyond the control of employers or employees, such as ill health.
What Will KPP Pay For?
KPP will pay out a lump sum on the death of an employee who is covered by the scheme, to reflect the loss of revenue to the company.
The policy will pay out for the cost of recruiting and training new members of staff to take over the role of the person your team has just lost.
The size of the payout is designed to reflect the costs and difficulties of recruiting a new member of staff, therefore the more nice the role you are trying to fill, the higher the potential payout.
Is It Right For My Business?
This is always a tricky question to answer and there is no definitive answer, but some businesses tend to be more vulnerable to personnel loss than others.
Is your company dependent of creative people, many of whom have unique skills and perspectives (designers, brand managers, advertising creatives).
Does you company engage in extensive and costly research and development (software design, pharmaceuticals, product development).
Are you an organisation with a recognised ‘public face’ who speaks on behalf of the business (A Branson, Gates, Jobs type who the public know and associate with your brand).
Do you generally feel that without the drive, energy and ability of your team are the factors that keep you competing in the market you are in?
If so, then you might be very vulnerable if you lost a key team player unexpectedly due to ill health.
If you would like to explore what KPP policies might be suitable for your business, click here for details.