91% of SMEs have four owners or less, and 95.6% have less than 10 employees. This indicates that these businesses are the ones that could be at the greatest risk in the event of the death or critical illness of a key person.
People are an important, yet often overlooked business asset and many businesses (particularly SMEs) have at least one key person it replies on.
The death of a key person can have a devastating effect on a small business, as it can lead to the loss of customers, key contracts, and valuable knowledge. A Key Person Insurance Policy can help to protect a business from these losses by providing them with the financial resources they need to recover.
So what would happen to your business if you, a co-director, partner, manager or one of your key employees was diagnosed with a critical illness, or died?
46% of UK businesses would be forced to cease trading immediately if a key person dies or was unable to continue working through illness or injury and 52% of businesses say they would probably cease trading in under one year.
Problems faced often include:
– Loss of profits
– Loss of sales
– Recruitment and training costs
– Loss of confidence from suppliers, resulting in difficulties obtaining credit
– Loss of knowledge of processes / systems
– Difficulties repaying existing loans
– Loss of goodwill
By taking out Key Person Insurance, small businesses can protect themselves from the potentially devastating effects of the death of a key employee.