You might have public liability insurance as a business owner, and you might also insure your buildings, stock, and vehicles. You may also have professional liability insurance and insurance to pay for legal costs. Is that the end? What about your other main assets, which are your key employees?
The heart of any business is its key employees, but this is especially true for the UK's 3.9 million small, often family-run businesses with up to 4 workers. Some of these businesses can't keep going if the owner is gone for a long time because of a serious illness or even death. All limited companies, partnerships, and sole traders face the same risks.
In this case, you must have Keyman Insurance. Keyman Insurance is a group of insurance plans that are all meant to protect a business financially from the effects of a long illness or even the death of a key employee who is important to the success of the business. The insurance can't replace people, but it can give money to buy time and pay for temporary workers, new hires, lost profits, or a cash infusion.
There are four types of insurance: insurance to help your business recover if your key employees are out of work for a long time or to train or hire a replacement, insurance to protect profits, insurance to protect shareholders' or partners' interests, and insurance for anyone who guarantees a business loan or banking facility.
People who are very important to your business should have Keyman Insurance.
Who do you need most? They are the ones who steer, create, and run your business. If you didn't have these people, your business would lose sales and profits, and it might not even be able to stay open. Look at the Board, the Partners, the owners, and more. Think about the roles of senior managers in sales, technical development, and operations. The roles will be different for each business, but the candidates will be obvious.
Getting these people insured will give you the extra money you need to hire temporary help or find and train a replacement.
Protect your profits with Keyman insurance.
Losing key staff has a much bigger effect than just the cost of their salaries and the cost of replacing them. Since they are important to the success of the business, their loss will hurt the bottom line. You can also get insurance for loss of income.
Shareholders or Partners can be protected by Keyman Insurance.
We're talking about insurance to protect your interests in case you get sick for a long time or die. Families might want to sell their shares in the business, but the other people in the business might not want those shares to go to new people. Keyman insurance plans can be set up to give the money needed to buy shares from the original owners or their estates.
People who give personal guarantees are covered by Keyman Insurance.
When a business borrows money from a bank or takes out a loan, the lender will probably want a personal guarantee or a charge on the business owner's personal property. This is important for small and new businesses in particular. So, what happens if one of these people gets very sick or dies? The lenders might be able to get their money back. What comes next? Again, the answer is Keyman Insurance. Insurance can be set up to pay off the loan and take a big load off the business and the guarantor's family.
Most of the biggest insurance companies in the UK offer Keyman Insurance as an extension of their Life Insurance and Critical Illness Insurance businesses. They have all the paperwork you need to get the protection you need and keep the tax man away.
So, can your business really afford to ignore Keyman Insurance? You'd have to be either brave or stupid to say NO.
