A continuing issue I notice within the businesses that I start working with is the lack of key person insurance. Whilst it is quite a morbid topic, it is a situation that if left unaddressed could prove disastrous to the survival of a business.
In short, key person insurance helps safeguard a business against the financial effects of a critical illness, a terminal illness or from the death of one of the company’s key people. What’s a key person? It’s an employee whose death or continued absence would affect the profits and the running of the business.
Within the businesses I work with, this key person is typically a founder, owner, managing director, head of creative or sales director; these people tend to drive profit and growth, so insuring them is more important than insuring the desks or computers.
The loss of an integral employee or director may result in reduced sales, a loss of profits or turnover, wasted time, recruitment costs, the disruption of development plans and increased workloads for the remaining staff. Key person insurance is a life insurance policy, which can have critical illness added. It is written on the life of a key business employee, but it is owned by the business. If something should happen to that person, the policy is paid out directly to the business. Money like this, at the right time, can save a business.
At Waypoint Partners we have a relationship with an IFA, Malcolm Lyons, who works exclusively in the creative, media, art and tech space – so he gets these business models and client needs.
Malcolm and his team handle the majority of our clients’ insurance needs and will be more than happy to help you with your key person insurance needs – or simply audit what you currently have to make sure it’s set up right.
by Andy Maher
Partner at Waypoint Partners