BE PREPARED FOR THE LOSS OF A KEY PERSON.

Preparing For A Key Persons Longterm Absence.

Hey, Kapiti business owner, are prepared for the loss of a key person to your business?

If you own a small business in Kapiti the fear of a key person getting sick or injured and being off for a long time. Even if you're a great employer that supplies health insurance for staff, a keyworker could still be off for months. This could lead to a significant loss of revenue and preparing for this could include Key Worker Insurance.

There are ways the business can prepare for the loss of a key person, take 2 minutes and find out more.

Is This Really An Issue?

That's a big YES. Being prepared for the loss of a key person is essential for a business. Even a one man band has overheads. What happens if the main source of revenue stops producing, how prepared to lose a key person is your business?

Remember ACC won't help the business. It looks after the person based on their taxable income. Every business has overheads that it takes for granted, financial commitments, contracts to honour. A quick glance at the bank statement will show what is spent. There's loan payments, tax liabilities, invoices due, phone, internet, advertising, accountant, systems ... the list goes on. These costs won't go away so it's a good idea to be prepared if the key person were to stop working.

The tools to help you prepare:

• Trauma Cover: Just like a personal policy any claim is paid as a lump sum to the business. To buy time, staff or close up for a while.
• Total and Permanent Disability: The same as a personal policy, paid to the business in the event of you being unable to work again. Enough to sell the business or close it done with no cash worries.
• Life and Terminal Illness: Like a personal policy, in the event of death or terminal illness the business will be paid a lumpsum. Enough to close it down or sell it on.
• A Cobination of the above: Combined policies are available to cover most eventualities.
• Loss of Revenue: A monthly payment into the business to cover the key persons contribution.
• Business Expenses: A monthly amount to cover the business overheads while a key person is unable to work.
• Ownership Buyout: Enough money to buy out the business partner should they become incapacitiated.

Fail to Prepare, Prepare to Fail.

How does your business get prepared for the loss of a key person? Here are some not quite real life examples.

Example 1:

The Problem: Jack runs a successful building business. He has a small team but he's the key person that gets the contracts and manages the sites, he'll even pick up the tools. If he became disabled Jack knows the contracts would dry up, the team would be leaderless and the business would collapse.

Potential Solution: Loss of Revenue cover. To cover Jack's financial contribution to the business.

Real Life: Jack can't work due to chemotherapy. His Loss of Revenue pays a monthly amount into the business. Jack has the time and resources to promote someone to a managers role and hire a replacement on the tools and still meet cost demands while the business adjusts.

Example 2:

The Problem: Jill owns an online consultancy business, she works primarily online but she also has a lease on a room. The business is successful but she is her business. She has long-term subscriptions to online resources and virtual assistants. If anything happens to her all revenue would stop.

Potential Solution: Expenses Cover will meet the cost of the businesses outgoings.

Real Life: After a serious accident she knows it will be a long recovery. Even though it was an accident ACC won't cover her business expenses. Expenses Cover meets business costs so the business can be put on hold.

Example 3:

The Problem: Lee runs a small legal practice, with a few junior staff but the name on the door matters and the clients are loyal. He's in his 50's and if anything happens to him he will want to wrap it up and retire.

Potential Solution: A combination Trauma/Loss of Key Person policy to provide a lump sum.

Real Life: After Lee had a near fatal heart attack the business got a lump sum giving enough time for the business to be sold neatly.

Be Prepared For The Loss Of A Key Person

If you own a small to medium business and rely on one or two key members of staff then please get in touch for a chat.

If you're not sure that this is for you then reach out for a chat. We can have a friendly informal discussion that will help you make your mind up.

You are the expert in your business and we are the experts in ours, insurance. We are happy to guide you through all things insurance and we're in our clients corner from quote to claim.

Cover Yours Limited (FSP769531) is a registered Financial Advice Provider and Marc Hamilton (FSP306046) is a Registered Financial Adviser and you can search the register here. Marc Hamilton is a member of the FSCL Disputes Resolution Service. Cover Yours Ltd and Marc Hamilton's Disclosure documents can be found here or you can email marc@coveryours.co.nz.