Who Can Take Out Keyman Insurance?
Question asked by Trudy Settle
We are a small firm considering Keyman Insurance as there are four or so key team members we would really struggle without. How would we go about placing a monetary value on these individuals?
This is a very good question and one that needs a lot of consideration.
Key Person Insurance provides the business with a lump sum payment should the insured life pass away or become critically ill.
The aim of the cash benefit is to keep the business on the straight and narrow during difficult times.
The value you place on losing a key person should reflect the loss in profits to the business. For example, key person cover might equal the amount of profit typically generated by a sales director.
You can also include additional costs you may incur, such as those associated with finding, hiring and training another individual to the same standard.
However, this is a simplified example — not every key person will contribute so directly to profits as a sales director.
The team at Drewberry is trained to help put a value on less tangible contributions to the business. We use a range of calculators which we can work through with you to help you choose a suitable level of cover for your key members of staff.
Moreover, our advice is totally fee-free, so get in touch today on 02074425880 to get started with valuing key people within your business.