For many, key person cover is not a well renowned phrase nor product, and even when it is it’s usually considered not as important as employer and public liability cover. However this isn’t strictly true. Not only will it protect their clients but it will also ensure their own fee/income stream is protected, too.
More than a quarter of small and medium-sized enterprises (SMEs) have missed out on insurance claims by failing to put policies in place, according to Legal & General (L&G).
The insurance provider found 29 per cent of SMEs could have claimed on a life insurance or critical illness policy in the past – yet just 12 per cent had an insurance policy in place.
Out of the businesses that did not have the appropriate cover in place and then went on to fail following a critical event, 80 per cent of their owners said a business protection policy would have saved their firm.
What’s more, three-quarters (77 per cent) of the firms without cover said they had suffered financially, with a loss of profits, pressure to meet debt repayments and issues over ownership found to be the main reasons for business failure.
In addition, 87 per cent of businesses that failed said key person insurance – a life insurance policy on a person vital to a firm’s operation – would have helped them to continue trading by covering the cost of replacing an employee and lost profits, as well as helping to pay off debts.
Business Protection policies can play an important role in helping to keep a business running after the death or critical illness of an owner or key employee.
The research carried out by L&G highlights the importance of the advice process, with 83 per cent of firms that had successfully claimed doing so with a financial advice.
If you want to ensure your business is protected, get in touch to speak to one of our advisers.