When you're running a business, there's a good chance that you have trusted people working for you. It could be that they have been with you long enough, or that they have specific knowledge and skills necessary to the survival and profitability of your business. Either way, you need them to be on the team. Otherwise, you might have a difficult time keeping your business competitive.
But what would you do if that important person is suddenly unable to perform his duties due to an accident, or death? This would have a devastating effect on your organisation. Imagine the possible consequences:
1. You will have to look for a temporary or permanent replacement. This may take a long time, especially if the key person has very specific skills and knowledge. Plus, you may also have to spend money to train and recruit the new person.
2. Your business might go bankrupt. If that key person is a shareholder or is essential to the operations of your company, you might be in danger of going bankrupt. In addition, some projects may have to be delayed or cancelled because of your company's loss that person, leading to a loss in profits.
These circumstances may be extremely challenging for your business. The good thing though is that you don't have to deal with the problem on your own. What is known as key person insurance can aid you in this difficult time.
Key person insurance is taken out on a key or important person in the business. Unlike other forms of insurance, however, the insured person's family or dependents do not receive the benefit in case of that person's death or disability. Rather, the payment goes to the company where that key person works. Once a claim has been made, the company may use the money to recruit and train a replacement or to pay out losses and debts.
In sum, key person insurance is very important if there are people in your business who are integral to its growth and operations. Otherwise, you might be left unprotected when something untoward happens, leaving the business in danger of losing huge amounts of money.
Here at Rate Detective, our consultants are ready to help you find the right key person insurance for your business. They will assess your needs and personal circumstances and provide you with rate comparisons of Australia's top insurers. Contact us today for more details!