How Does Key Man Insurance Work?

Key Man Insurance is a form of commercial insurance which protects firms against the loss of an employee who would be considered as a vital cog in the business and is, therefore, key to its success.

Also known as Key Person Insurance, in the event of losing a key employee to a life-threatening or terminal illness, or even death, the policy from Anan Insurance Broker Company Limited will pay out a lump sum to assist the company in coping with the loss. The cover works in a similar way to regular life insurance although rather than paying the spouse or children of the relevant person, the business will receive the payout instead.

Key man cover will guard your business against any financial woe and will form a vital part of your business’ contingency plan, which should be in place to make sure that if you lose a key figure at your firm that it has the smallest possible impact on the day to day running and success of the company.

What Are The Benefits Of Key Man Insurance?

Dips in Profits and Sales Are Protected

While your employee is receiving treatment for their illness or you are waiting to complete the recruitment process to replace a member of staff who has passed away, key person insurance will ensure you do not feel the effects of a potential drop-in profits and sales. Because of the key man cover, profits will most likely stay as originally projected, retaining your firm’s competitiveness in your relevant industry.

Also protected in this will be your company’s share value as a perceived doubt regarding your firm following the loss of a key person will already be insured against.

Recruitments Cost Are Covered

Finding new staff can be a time-consuming and costly exercise, as can training a new employee once you have found one who is suitable. Key Person Insurance covers these costs in the event of your firm losing a key member of staff to sickness or death. No business wants to be spending in excess to replace their staff as this could have a negative impact on their bottom line.

Some Stress Can Be Alleviated

Losing a key man can be a distressing time, especially when illness and death is the cause. The strain that this type of absence can put on your staff and your business can be monumental, as staff attempt to pick up extra workload. By making sure you have key man insurance for your company means that in a worst-case scenario your staff will be in a better position to cope.

Employees Will Feel Valued

Even in the case that you do not actually have to claim back off your key person cover, you can still reap benefits that the policy can bring. For employees, knowing that they are covered under a key person insurance will make them feel secure and valued in their position with your business, something that is only bound to benefit the productivity of that individual.

This type of insurance makes it clear that the business is looking to protect against potential times of adversity something which will increase the feeling of feeling of security for staff and therefore help to improve your employee retention rates.

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Anan Insurance Broker Company Limited can deliver you with further information regarding our many insurance types on offer. Contact us today!