Since Rod and I are the two main salesmen and technicians we couldn’t imagine what would happen if one of us was unable to work for extended periods of time due to illness or injury. Key person insurance wasn’t even a want. It was a need! Thanks to Kat and the Verdure team for getting us the best solution to rest assured that should something happen to one of us, our business would continue to operate.
Where would your business be without the most important key income producing staff?
While it is routine for corporations to insure their physical assets, most forget to insure their key human resources. Many businesses may not be aware that their key income producing staff can be insured! Insuring key persons should be part of any prudent succession planning strategy since the chance of this asset being unable to work due to critical illness or injury is significant.
Without Key person insurance, business will not only struggle to cover costs of the executive, CEO or key sales person, but will also be left hanging when it comes to finance obligations as it will cause financial strain due to impaired credit rating and loss of customers because of the key person’s death.
Key person insurance can provide a lump sum payment to your business should your key income producing staff – such as salesmen, CEO’s or managing director’s – be unable to work due to critical illness or injury. Such illness or injury could be a heart attack, stroke or cancer, conditions which may require several months if not years to fully recover from before they can return to work. How would your business cope during that time without key person insurance?
Aside from the significant loss of revenue, there are other risks involved when key person insurance is not in place for your business. Expenses incurred will necessarily include:
The recruitment and hiring of a new employee. The manpower involved in finding someone who is as skilled and knowledgeable as the former key person can be a costly and time consuming exercise.
The costs of training replacement human resources. While the new employee may have the skills and experience needed for the job, but they would still need time and training to familiarise themselves with the company, its systems and clients.
The cost of a signing bonus. A signing bonus is often given to the prospective employee to attract him to signing a contract. While optional, it shows them just how valuable they would be to the company.
The cost of transferring the new hire. In some cases, the new key employee is not from within the area where the business is located. Companies may add the transfer/moving costs as part of the package to entice them to move.
Coverage of any bond or liability the new hire may have with their previous company that will impair their transfer to your business, particularly if the new hire is under a contract to stay with their previous company for a certain period of time.
The cost that is associated with providing income or assistance to the employee if he becomes disabled or to the surviving family if he dies.
Minimise loss now! Protect your business with Key Person Insurance.
Key person insurance provides a business with funds that can help them manage any financial risks that can come from unforeseen circumstances resulting from the loss of an important employee.
The insurance proceeds of a key-person insurance policy can help your business:
It can stabilize the stock of a publicly held company, as creditors and shareholders generally look favourably on the business’ use of key-person insurance to mitigate potential loss.
Proceeds can be used to help find and train a new employee if that is needed.
It can provide the funds to purchase the stock belonging to the deceased/disabled shareholder.
The death or permanent disablement of a key person can have a devastating effect on a business, especially if that employee was responsible for substantial accounts and profits, or had established important relationships with suppliers, manufacturers, buyers, or clients which are often irreplaceable. The insurance payout can help minimize the loss of profits that result from the loss of this key employee and his/her business relationships.
They can be used to fulfil any contractual agreement to continue to provide the employee’s salary to his or her family for a certain number of months.
And on the softer side, the insurance proceeds also can counter the financial impact of distracted employees — missed deadlines, deteriorating morale, and personality conflicts.
If you’re worried about your business and its reliance on key employees you should consider key person insurance now! We are available to help you insure your key personnel, call us today to arrange for a consultation or for an obligation free quote!
Why Verdure Financial Planning Solutions?
Verdure Financial Planning Solutions is a boutique financial planning practice with offices in Sydney and Melbourne and with clients all over Australia. Our planners have over 15 years of experience in financial planning and can help with all aspects of your insurance needs.
Our specialty is key person and business partnership insurances. In order to insure your business for the right amount of cover, we will make a detailed insurance needs analysis and source the best product available on the market from Australia’s leading life insurance companies at the most competitive price. All products we recommend have up to date definitions for conditions and we review these products personally before we recommend them to a client.
As you may be aware, Australians are generally under-insured. The same is true for Australian businesses. We would like to help solve Australia’s under-insurance problem by insuring you for the correct amount of cover needed – no more, no less. Verdure Financial Planning Solutions have devised specific methodologies to ascertain the right amount of insurance cover needed for the life of an executive – or any key-person.
As an example, we may recommend $600,000 of Life, Total and Permanent Disability and Trauma Insurance to cover your Key Person needs, owned by “Your Business”. At claim, the payout ensures that the business is able to continue running profitably for 12 months using the following equation:
$200,000 would cover the cost of wages for one year for a replacement employee,
$200,000 would cover any associated expenses to the business such as training, lost productivity, recruitment costs, non-billable time, etc.
$200,000 would cover the loss of profit that comes with losing the key employee
During this 12 month period, the business decision makers will have an opportunity to decide what to do with the business. For example, they may decide to sell after 12 months or retain it, without a negative cash flow impact.
Due to our personal and holistic approach, we are able to identify key persons as well as any discrepancies in existing policies. With over 15 years of experience, Katriel Warlow-Shill and the team at Verdure Financial Planning Solutions are the thought leaders and engineers of appropriate key-person insurance cover which enables your business to recover before it has even stumbled.
Why wait? Arrange a free meeting with one of our experts today!
How Verdure Financial Planning Solutions can help you
You worked very hard to build your business, so it is worth protecting it by considering key person insurance to cover for the loss of a key staff member as well. Protect your business! This is a chance to insure your businesses continuity should anything tragic occur to a key person in your business.
Key person insurance should be considered for all businesses that rely on key personnel for their profits. In particular, it can help growing companies such as:
Start-up companies where all employees are vital to its success
Partnerships such as accounting and law firms
Sales based companies where a particular employee generates most of the income
We are here to help you. We also specialise in the following areas of business related insurances that may be of interest to you:
Business succession or business partnership insurance
Business expense insurance
Debt protection insurance
Get in touch with us today for all your key person needs
FREE Private Consultation:
You can come to our office, or we can come to you. Simply contact us any time, 24 hours a day, to discuss your case with a member of our Insurance team
You can come to our offices, in Melbourne, or Sydney
Or we can travel to meet you in person to discuss your situation
You do not need to give us any personal information if you don’t want to. You do not have to share anything with us if you don’t want to
Simply tell us what you can about your business, and we will give you our professional opinion on what your options are.
Our Insurance experts will then give you their review of your situation, and share their expert opinion as to the best course of action you should take.
Here is what our clients have to say:
The team at Verdure worked professionally and efficiently to make sure that my family is taken care of should something happen to me and I can no longer work. I was impressed by their knowledge and experience in the key person field!
Now that my Board has taken out a key person insurance policy for me, I can rest easy knowing my family will be supported in my absence. Verdure managed to cover all bases so I am covered every way I turn.
Due to an unfortunate freak accident I am now classified as totally and permanently disabled with no prospect of returning to work! Thanks to the insurance solution Katriel and the Verdure team have implemented for me, I am now receiving over $19,000 in payments every month from a policy Verdure got for me. Thank you guys!
We are a busy and growing start-up law firm and it was essential that our key partners were protected. Without these key persons our business would not be able to continue to exist. The Verdure team really delivered with what we needed providing a personal approach and tailoring their solution to fit in with our business model. Well done!
With the fast pace of the advertising industry, you never know what could happen. We needed to make sure our key personnel were well looked after, and that our business could continue to function profitably in their absence. The Verdure team implemented a solution that would take care of our costs, should a key person suddenly not be able to continue to work due to illness or injury