Construction giant Carillion is the latest company to hit the headlines for going into liquidation, with claims that the company is crippled by debts and thousands of jobs are at risk. However, stories like this are not isolated. According to the latest Insolvency Service figures for corporate insolvencies, in the 12 months ending Q3 2017, in England & Wales, 1 in 196 companies entered liquidation.

Of course, there are many reasons why a business might fail, or a company may be forced into administration; poor leadership and management, ignoring customer needs, no differentiation, lack of planning and focus, over expansion – the list is endless. In fact, a study by Legal and General found that 53% of businesses thought they would cease trading in under a year after the death or critical illness of a key person.

It won't happen to me
Unfortunately, the possibility of a key person dying or suffering a critical illness in your business is real – Royal London found that 3 in 10 (30%) of all small and medium enterprises (SMEs) had experienced the loss of a key employee for three months or more due to a serious illness. Statistically, if a business has five key people or shareholders in their early 40’s, there is a 39% chance one person will die before they reach 65.

Ask yourself, how would your business cope if a key employee, vital to its running, suffered a serious illness, injury or died? Would the impact of losing them unexpectedly be difficult to recover from?

People are important
In many small and medium-sized companies, the success of the business can depend on one or two key people. If you have worked with these people for many years, it’s easy to underestimate just how valuable they are, how much they know about the company, how many extra hours they put in. We can never be sure what’s around the corner and sometimes, without warning, life throws the unimaginable at us. And that’s when business protection can help - to maximise your chances of business survival should the worst happen.

We believe that protecting a business from loss of a key employee due to serious illness or death doesn’t have to be complicated (or costly).  Key person protection can help protect a business against the financial consequences of losing a director, partner, member or shareholder, or owner, as well as key employees., as a result of death or a critical illness.

A key person is someone whose knowledge, work, or overall contribution is considered uniquely valuable to the company. The policy pay out can help pay towards replacing that employee or providing a cash injection to cover the proportion of profit that employee is responsible for. Unlike a personal life insurance policy, the business pays the premiums, and it is the business which receives the lump sum benefit to cover its loss.

If the worst does happen, businesses could benefit greatly from a lump sum becoming available to stabilise cash flow and keep the business trading as normal.

Death and/or serious illness can be devastating and could have serious financial consequences for any business – but without the correct planning, it can be disastrous for its survival. Our team of experts could help you identify the right type of protection insurance for your business needs and get your business covered – to find out more, why not contact us today? 0800 612 8005.