Using Life Insurance To Protect Your Key Employees
Most businesses rely on the work, experience and skills of a few valued employees who are key to the efficient running and profitability of the company. Whether a chairman, director or talented technician, the loss of such a crucial staff member could and often does result in lost revenue and even closure in some cases. Many employers spend time and money protecting their tangible business assets such as buildings and machinery with traditional business insurance policies but, are often unaware of the potentially far greater risks due to the reliance on a few key employees. Take a moment to think about the staff members who your everyday operation relies upon. Do you have a sales director or salesman who is responsible for generating the majority of your orders? Do you have any contingency plans to ensure normal working practices continue should your operations director or chairman die or be unable to work due to illness or injury? The reality is that many businesses are so busy working in the business to step back and consider the threats to it's continued operation and profitability. Another question to ask yourself is how easy would it be to find a replacement for a key employee and what would the cost of recruitment and training be? Does your business have any plans for this eventuality and where would the money to fund such an operation come from? You also have to factor in any potential loss in revenue from the temporary or permanent loss of a key member of staff.
Thankfully, part of the solution can be provided by a simple life insurance policy owned by the company which insure's the life of the employee. If the employee were to die during the plan term, the company would receive a cash lump sum to fund the costs of finding a replacement and any loss of revenue. Many key man policies have a term matching the employees expected retirement date. Another risk to consider is the potential critical illness of a key employee causing lengthy absence or permanent loss. The statistics show that the chances of being diagnosed with a critical illness are greater than dying before age 65 so the risk to the company can also be greater.
Adding critical illness insurance to a key man policy can ensure this risk is also covered and the cash lump sum also paid if the employee is diagnosed with an illness covered by the policy. Whichever type of cover you choose, it's important to shop around and compare policy features and premiums from as many insurers as possible. If you are in any doubt about buying life insurance for a key employee, it's important take professional advice from an independent financial adviser. However, if you know what cover you need, go online and use a quote comparison site and look out for discount life insurance brokers who could save you as much as 40% by sacrificing some or all of their earnings to reduce the premiums you pay.