Key Person Insurance & your business survival
Why Key Person Insurance is essential for your business survival
The unexpected loss of a key person could seriously impact both short-term profits and long-term business survival. That’s why Key Person Insurance helps to provide protection for the value you’ve worked so hard to build.
We’ve all heard it said that a business’ most valuable assets walk out the door every night. But while every employee makes a valuable contribution to your business, the reality is that most businesses rely on just a few high performers and key decision-makers to win new business and deliver the high quality service your customers expect.
So it’s important to ask yourself how your business would cope if one of those key people suffered an unexpected illness or injury that took them away from your business for an extended period — maybe even permanently.
What are the risks?
The costs can be substantial. A 2014 report from Oxford University Business College found that it costs more than £30,000 (around $61,500) to replace an average employee, including recruiting costs, lost output while the replacement gets up to speed, and time spent recruiting and training a new worker.
And that’s just an average employee. The impact of losing a key person can be many times greater. One recent academic study found that a high performer delivers 400% more value than the average performer. Which means that unless you protect yourself, the loss of a key person could potentially cost hundreds of thousands of dollars, severely affecting the performance of your business as a whole, and perhaps even putting your long-term survival in jeopardy.
That’s where Key Person Insurance comes in. Key Person Insurance can protect your business from the financial impact of the death or permanent disability of an employee vital to your organisation, combining Life, Total and Permanent Disability (TPD) and Trauma cover in a single policy. The aim is to safeguard the value of vital business assets — the people who keep your business running from day to day.
How it works
The essential difference between Key Person Insurance and standard Life cover is that on the death or disablement of the specified employee, it pays a benefit to the business, rather than the insured person or their family. That gives you the valuable funds to offset the impact of lost business and the costs of recruiting and training a suitable replacement.
In summary, Key Person Insurance helps to underpin profitability and business continuity when the unexpected happens.
Why Steadfast Life?
Steadfast Life are business risk specialists, providing Key Person and Buy/Sell Insurance advice tailored to our clients’ business needs.
If you’d like to find out more about Steadfast Life or Key Person Insurance, please call Daniel on 02 8456 7806 or email firstname.lastname@example.org.
 Oxford Economics, The Cost of Brain Drain, February 2014.
 O’Boyle and Aguinis, “The best and the rest: revisiting the norm of normality of individual performance”, Personnel Psychology, Vol 65, Issue 1, pp 79–119.
The above advice is general. Before you decide to purchase life insurance or retain your existing cover, you should consider whether the advice is appropriate for your financial situation, needs or objectives and consider the applicable Product Disclosure Statement.