Keyperson Insurance

Gordon Bennett is the Managing Director of an independent accountancy firm here on the Island. Business is booming and much of this is down to the tireless enthusiasm of John Scott, his Sales Director. His skills have meant many accounts have been snatched away from larger established agencies. Indeed, his most recent successful pitch has netted a contract that will guarantee expansion for the next five years.

Gordon was confident his company can look forward to a rewarding and profitable future.

“Then everything changed, I was greeted with the tragic news John had been killed in a traffic accident. After the initial shock, my thoughts turned to John’s family. How must they be feeling? Will they be okay financially?” said Gordon.

But then he began to think about the implications of John’s death on the future of his business. What if an important contract is now in danger without John’s enthusiasm and skills to manage the account?

“To many people, John was the face of the company. I crunch the numbers but have never been good at the sales bit. What will his death mean? I thought. ”I had to face the reality that John’s death could also be the death of the business”.

Luckily Gordon had met with Platinum Insurance.

“Like most people, I think insurance is dull, but the guys at Platinum explained that insurance can be used to protect our profits as well as our assets, an altogether more interesting concept! The company car was easy to replace as we all have to insure them, but the cash injection from our keyperson insurance claim on John’s life helped us pay off our outstanding business loans and covered the cost of recruiting a replacement”.

Most companies that have had the foresight to take out keyperson insurance have simply effected death benefit only policies. This is fine, at least they have some cover, but is it enough? What would have happened if John Scott had had a stroke instead of dying in a car crash? There would have been one added element: uncertainty. Will John recover and return to work? Will it be after two weeks, two months or two years? Will his health ever improve to allow him to return to such a high-powered position?

Critical Illness cover must be considered seriously in addition to death benefit as it can provide ‘interruption’ insurance to underpin profits whilst a business restructures to cope with the new situation.