Keyperson Insurance

Insurance has become a common feature of our daily lives, and rightfully so. Whether referring to vehicles, properties or health, this level of protection it essential for our financial and emotional peace of mind. Businesses likewise need to enjoy adequate forms of insurance. One lesser-known but very important variant is known as “keyperson insurance”. How does this policy work, what is it intended to protect against and what are the risks if this type of keyperson cover is not present? Thee are all important questions which we will look at in greater detail.

A Breakdown of Keyperson Insurance Packages

Let us imagine for a moment that a critical employee of a business such as a managing director suddenly suffers a heart attack. As there is likely to be a good amount of interruptions to a business after such an event, financial losses could quickly mount. The main intention of this type of insurance is to provide a fiscal “parachute” during this time period. As a result, access to much-needed liquidity is never far off. Operations can continue as usual and core functions will not be jeopardised.

How is a “Key Person” Defined?

A “key person” can be defined in a rather broad manner. To be succinct, most coverage policies define this individual as someone whose continual presence is necessary in order to maintain the operations of a firm. A few examples (in addition to the managing director mentioned above) can include project managers, IT directors, logistics directors, shipping coordinators or lead product developers. In essence, a key person is anyone who is vital to the success of an organisation.

What are the Different Situations Covered by Key Person Insurance?

As a rule of thumb, these plans are intended to provide fiscal protection against losses for three different situations. These are:

• Accounting for losses incurred during the absence of an important individual. This could include providing temporary staff.
• Ensuring profits are maintained by protecting the firm from a loss of revenue as a result of an interruption in operations or product development.
• Keyperson cover can also be relevant for financial personnel who supply loans and other types of fiscal guarantees. In this case, the level of coverage is generally equivalent to the monetary value of the services rendered.

Of course, the type of coverage offered as well as the financial limits will vary from provider to provider. There may also be times when addenda can be added into a contractual clause in order to address discrete situations. Should keyperson insurance not be present, any enterprise could be in grave danger of losing revenue. In the most severe of cases, it may even become insolvent.

This type of business insurance is just as important for budding enterprises as it is for well-established firms. However, it is also critical to appreciate how much these policies cost. Please use the online form located at the top of this page to obtain a real-time and accurate quotation.