DON'T WAIT FOR THE WHEN, PROTECT FOR THE IF
WHAT IS KEY PERSON INSURANCE?
The success of almost all SMEs depends on a few key people. And so, if you have a practice, it’s no different.
The sudden loss of a key person will have dire consequences for everyone’s future.
A key person doesn’t always have to be the business owner, either. It could include anyone who works for you. So long as they have specialist skills or knowledge, it may be something you should think about.
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In fact, provided those skills are essential to the business, that worker can be described as ‘key’.
Key Person Insurance means that if a key member of staff dies, then a subsequent pay-out can be provided.
Let’s say your dental practice loses its renowned implant specialist.
Your practice can’t attract patients for dental implants anymore. And now there’s a sharp and subsequent drop off in profits.
This is exactly the type of situation where Key Man Insurance can help.
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Loss of profits
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Loss of important personal or business contacts
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Loss of confidence from suppliers and customers
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Loss of detailed knowledge of the businesses processes and systems
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Training and hiring a replacement member of staff
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Repaying any loans that the key person has made against the business
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Difficulties in meeting existing loan repayments
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Raising the required cash to repurchase shares from personal savings
Often when owners protect their company, they’re quick to insure their premises, vehicles, and stock.
But they forget to think about their most valuable assets; themselves, and the skilled members of staff who make their business tick and ultimately create profit.
CRITICAL ILLNESS COVER AS PART OF KEY MAN INSURANCE
So, we’ve covered death. But what would happen if one of your employees fell critically ill?
For most practices, they would lose a much-loved colleague. And gain a new financial burden.
According to Legal & General, 59% of small businesses think they’d fold if they lost a key member of staff. (L&G Website)
Such a scenario is catastrophic. The employee struggles with their health whilst your practice battles for survival.
If you want to keep the practice going, you must recruit a replacement member of staff quickly.
Which then costs time and money to train and integrate.
But the real cost comes in when you pay the agency fees as they work out at 25% to 100% more
expensive.
And the more specialised the staff member, the higher the price…
Meanwhile, you still need to make regular payments to the employee off sick.
The financial burden on SMEs like doctors and dentists can be too much.
And the story isn’t better for the employee, either.
If they can’t work more than four days, they’re entitled to Statutory Sick Pay. But that’s barely enough to pay the bills. Have you checked the current Statutory Sick Pay rates?
In both cases, Critical Illness Cover saves the day.
Businesses receive a pay-out when a critical illness forces an employee to stop work. And the employee receives continued salary payments throughout the term of their illness.
This vital lifeline comes at no further cost to the business. And ensures your employee is well cared for. Which hopefully means they can return to work sooner than might otherwise have been the case!
Don’t become part of the grim statistics. And don’t subject your practice and family to needless risk. Take these vital steps to ensure your business can withstand the worst-case scenario. Both now and into the future.