Ian Robinson, Independent Financial Planner, tells us about a client who had identified several of their senior employees as a ‘Key Person’ within the business.
He explains how the policy provided peace of mind that the business would be financially secure in the event of a loss of a key employee.
The case
Due to the specialised nature of the company, finding a
replacement for our client’s key employees would have been difficult and,
potentially, very costly. If any of them were to suffer a long-term illness, or
even die, new candidates would have to be enticed away from rival firms with
much higher salaries.
First, Ian spoke with the client to discuss their concerns.
After analysing their options, our client found that the cost of providing Key
Person Protection cover over a five-year period was more acceptable than the
risk of self-insuring. Also, it was more cost-effective than the costs of
finding replacements or budgeting for the loss of income.
During underwriting, it was found one of the key people had
some health issues which increased the monthly premium. However, the client
felt the cover was even more important because of this. Treating the increased
premiums as an allowable business expense, they were able to provide an
effective level of cover.
With Key Person Protection in place, our client can operate
with the peace of mind that they are well-prepared for the potential financial
damage that may have otherwise been caused following the death of a key
employee.
