Key Man Cover - what is it?
Exactly as it sounds, Key Man Cover (or Key Person Cover) is an insurance protection that provides financial cover, should something happen to key personnel within your business.
This could be caused by the onset of a long-term illness, a permanent disability, or when someone unexpectedly passes away. It’s a form of life insurance and important to note that a Key Man insurance policy does not cover personnel that decide to leave your business.
Having foresight and being prepared for the unexpected and the loss of key people should form part of your business continuity plan. By preparing for a worst-case scenario, you will be protecting your business from potential risk and safeguarding your company’s future – we believe that Key Man Cover is an invaluable and affordable investment.
Your business will most likely have several people that would be classed as critical to the financial success of the business. These would typically be the owners or directors of a company, members of the executive leadership team, top salespeople or head engineers or designers. These are the people that you should identify and cover with a Key Man policy.
Usually paid out as a lump sum to the business, Key Man Cover provides financial security and allows you to cover the salary of temporary staff, the recruitment and possible training of replacement staff along with covering any outstanding loan repayments or profit losses that need to be met. This insurance will help to keep your business afloat while you adjust to the loss of your key person.
We can help you to assess the key people in your company and assess the impact on your business if they were no longer available to carry out their role. Read our blog on how to assess your key person risk.
The long-term partnerships that we form with our clients ensures that any changes to key personnel, that may affect your policy, will be identified quickly. Any changes that need to be made will be actioned quickly, for complete peace of mind.
You can find answers to more Frequently Asked Questions on Key Man Cover below.
Why not talk to us today about how Key Man Cover can protect your business? Call us on 01480 272727 or complete our enquiry form and we’ll be pleased to assist.
Frequently Asked Questions
Why do I need Key Man Cover?
Key Man Cover provides financial protection for you, your staff and your customers. If a key person is no longer able to work for the business, you need to know that your business will be in a position to continue and be able to meet any debts.
It will help to ensure that the business will be able to continue with minimal disruption, whilst you seek a replacement or make alternative arrangements to your business offering.
Who should have Key Man Cover?
Key Man Cover should be a consideration for any business that has staff who are considered key to the financial success of the business. This could be a top engineering who brings a specific skill set that no one else within your company has, or you as the owner of the company, with perhaps years of knowledge and experience that your staff don’t have.
Key Man Cover is paid out to the business rather than the individual and will allow you breathing space for your business to continue as normal whilst you find and possibly train a replacement.
What are the benefits of Key Man Cover?
Key Man Cover provides financial security for your business if a key person is no longer able to work. The lump sum paid out under the policy in the event of a claim will ensure you can continue to pay any outstanding loans or debts; it will cover any profit losses and help to pay your costs in recruiting a replacement and providing any necessary training. This means that your business will be able to operate as close to normal as possible, despite the unexpected event.
How much Key Man Cover do I need?
This will depend on your unique situation. As the business owner, it may just be you that should be covered by Key Man Cover, or if you operate a larger organisation, there may be several individuals that should be covered by the policy. The levels of cover will vary dependant on the individual’s contribution to the financial success of the business and whether they are responsible for any loans.
A key person assessment will need to be carried out to ascertain the cover required, after which we would approach our A rated insurer partners to find the best policy to match your specific needs.
How can I buy Key Man Cover?
The best way to arrange your Key Man Cover is to contact us and ask for a key person risk assessment. This approach will ensure that you correctly identify the key people in your business and obtain the right level of cover. Getting the right advice and guidance on your Key Man policy is vital, to ensure you have a comprehensive policy that will protect you should it ever need to be used.
As an independent commercial broker, we can honestly say that the policy we recommend, will be the right one for your needs.
As a Barnes Commercial client, you can take advantage of our risk management hub where your employees can take online courses in health and safety, complete with recognised certification, which count towards CPD.
Find out more about how we can help you to manage risk.
