Key Person Cover
Eight Suppliers - Multiple Options
What are the most important parts of your business? Your products or services, your location, your intellectual property, your patents, your process's, your systems or other areas?
Yes, these are all important, but without the "Key People" to operate these systems, sell your products or services, develop your patents and process's, then these other important parts do not work.
You business effectively says to you: "Give me the resources, the goods, the services, the patents, the process's etc and give me the best people and I will make you profit".
How do you define a "KEY PERSON" for your business?
One way is to take a little time and "play God" with the employees in you business.
If tomorrow you were told that one of your Employees (possibly a Key Employee) was not able to come to work as he/she had just died in a car accident, or had suffered a stroke and has lost all speech, ask yourself:
- "X" may be replaceable in time, but what will be the immediate financial impact on my business? (How do you cope when your key people are on holiday?)
- How would that employee loss, impact my bottom line financially?
- Is this financial impact minimal or catastrophic to my business?
- Is there another person like "X" that I could persuade to join my business? How much would that cost me?
- Do I need to invest in training costs for a replacement person or another employee to replace "X"?
- Are we exposed to contract guarantees if "X" is unable to work?
- What about personal guarantees? Will my business be unable to complete current projects & contracts?
- Will my bank lose confidence in my business and demand that I pay back their loans? (also see separate Debt Cover)
- Will my biggest customers stop doing business with me?
- Will my biggest suppliers demand payments and stop selling to me on credit?
- Will my other employees resign because of the uncertainty of the future of my business?
- Will my business lose the goodwill I've been working so hard to gain?
- Will I lose my competitive advantage to the competition?
- What will happen to our market share if "X" was absent or our marketing manager disappeared?
- Will I lose so much income that I may have to sell some of my business assets to pay my debts and expenses?
- Are decisions deferred until "X" returns from holiday?
- Do sales decline when "X" has four weeks well-earned rest?
- What specialist roles are performed by "X" or any other one person in my business?
- Who will initiate and nurture our strategic relationships if "X" or another key Person is absent?
- Who will be able to run our state-of-the-art computer network?
- Is there any intellectual knowledge tied up in the minds of one of my Key Employees?
- Who will handle our production requirements if our manager was not there?
- Besides me, who else really matters in making my business succeed?
- Am I one of these "KEY PEOPLE?
What events do you address?
- Death - lump sum cover
- Trauma - lump sum cover
- Total and Permanent Disablement - lump sum cover
- Temporary Total Disablement - monthly payment for a defined term (also see Revenue Cover)
- Assess the cost of replacement, training, acquisition costs,
- To replace the loss of income due to death or disability of a key person.
- To cover expenses.
- To pay debts and accounts payable.
- To protect your assets (also see seperate Debt Cover)
- To borrow money from banks or investors.
- Additional funds to let your banks, customers, creditors, and employees know, that if anything should happen to you or your key people, then your business will still have the financial resources to keep going.
- Other affected areas.
- Immediate cash is what is important "Cash is King!"
What is the probability that at least one of the Key persons in your business will die or become disabled before the age of 65?
Two Key People
|Three Key People|
|Source: - Chance of death NZ Life Tables 98-00 - Chance of Disability - AXA NZ|