Why key person insurance matters

Every company has, at least, one employee who is essential in keeping the business’ operations running smoothly. It could be someone who has strong relationships with suppliers and clients that your business depends on, who knows all the processes inside out, who others can turn to for direction and advice or who has unique skills that would be tricky to replace.

Does anyone in your organisation spring to mind when you think of these attributes? If so, this is likely your key person or persons.

Now imagine this person was suddenly unable to work. How would this impact your business? What would happen? What would you do?

John and Carol ran a small care home called The Oak Inn. While John focused on the residents and day-to-day care, Carol managed the staff rotas, paid suppliers, and led on an expansion project that would allow them to open a second care home.

Unfortunately, Carol suddenly became seriously ill and couldn’t work any longer. For many businesses, this would have meant catastrophe, but thankfully, Carol and John had planned ahead and always invested in key person insurance. As part of the policy, The Oak Inn received a monthly payment to keep things running smoothly in Carol’s absence.

Sadly, Carol’s illness took a tragic turn, and she passed away, leaving John to pick up all the responsibilities that formally sat with Carol. As well as coping with the grief, John now had a new role to learn, which left him feeling very overwhelmed. But thanks to their foresight, John wasn’t alone to face the financial strain. Their key person insurance policy kicked in and paid out a lump sum to The Oak Inn so that John could hire a new care home manager and project lead. That support meant The Oak Inn could continue with the expansion and keep caring for the people who depend on it.

With key person insurance, you know that your business can get the breathing space it needs to recover if your indispensable person is unable to work.

Key person insurance gives you practical support which for smaller businesses in particular, who tend to rely on a few key individuals, can be the difference between your company surviving and closing. 

Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems, we recommend that professional advice be sought.