• It protects the remaining business partners and employees from the business suffering permanent losses or closing down
• It provides cash to recruit and train new employees
• It ensures the continued existence and development of the business
• It ensures that existing or potential client contracts are not affected

• An employer insures the life of a key employee to compensate the business for the loss of income that it would suffer if the key employee dies or becomes disabled
• The employer makes regular contributions
• The contributions go towards a policy that the business takes out on the life of a key person in the business
• Upon death or disability, the business receives a lump sum to cover expensive replacements costs or to provide for potential losses, such as decreased sales or the loss of profit or sales while a replacement is trained

Each key person is individually underwritten, and how much you will pay depends on the insured amount. This is usually determined by the costs involved in replacing that key person.

Losing a key person could mean a slowdown in turnover, a decline in profitability and sales, stricter terms from suppliers, loss of expertise, and dealing with the difficulty and high costs of finding a successor. The payment that an employer receives from key person insurance can be used to absorb disruptions to the business and provide funds to recruit and train a suitable replacement.