The impact of the loss of a key person on the future of a business can be devastating.
Statistics suggest that a large percentage of companies cease trading within a year of the loss, through death or serious illness, of a business owner, director or an employee with a specialist skill. For sole traders, that level is believed to be even higher. Even in those cases where a business is able to continue trading, there could be financial loss resulting from having to release the value of a partner’s share, managing the business for a time without a person’s invaluable skill set, or the time and cost involved in going through the recruitment process to replace them.
Gareth Smith, Protection Specialist at David Williams IFA Mortgage & Insurance Services in Northampton, said:
“Having insurance in place to protect a business against the loss of a key person is vital to ensure things keep running smoothly should anything happen. We can’t plan for a sudden death or onset of serious illness, but we can put measures in place to ensure everyone is protected; from the business owners and shareholders to the family of the person who has passed or is unable to continue to work. Inevitably, the loss of a work colleague is a difficult time for the business and that person’s family, and the last thing anyone needs is uncertainty and worry about the future.”
Key Person Insurance protects a business against the loss of someone with specialist skills. Someone in that position will often be on a high salary and, should that person die or not be able to work anymore, the business will have to replace them, often through an expensive recruitment procedure, or though investing time and money to bring a replacement up to the appropriate level.
Business protection, agreed well in advance with owners, partners, directors and shareholders, will safeguard the value of each individual’s share of the business, so that their families receive their entitlement and the business can continue trading unaffected financially.
“A business wouldn’t consider not insuring its machinery and equipment, or its premises, but the effects of the loss of a person is sometimes overlooked. By sitting down with a protection specialist, and working out what the business needs to do, with the agreement of all parties, to protect against the unexpected, safeguards the future of everyone. When the death of a colleague occurs, the last thing those in the business and the family of the person who has passed away want is for disputes and uncertainty. Few businesses have enough liquidity to simply pay a family their loved one’s share, so the correct insurance means that neither the relatives nor those in the business need to worry about their futures.”
In addition to working with clients to identify and put in place the correct protection, the team at David Williams IFA Mortgages & Insurance Services also liaises with the firm’s accountants and legal teams to ensure the cover is tailored to specific needs, that payments are made in an appropriate way and that there has been no oversight that could possibly lead to issues when a claim is made.
“Understanding what will happen in any given scenario to protect their colleagues and their loved ones gives everyone peace of mind,”
Find out more about David Willliams IFA Mortgage & Insurance Services at www.dwmortgageservices.co.uk or call 01604 250280.