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Protecting what you’ve worked so hard to build
The unexpected loss of a key person could seriously impact both short-term profits and long-term business survival. That’s why Keyperson insurance is essential protection for the value you’ve worked so hard to build.
We’ve all heard it said that a business’ most valuable assets walk out the door every night. As a business owner, I know my staff are what drive my business. But while every employee makes a valuable contribution to your business, the reality is that most businesses rely on just a few high performers and key decision-makers to win new business and deliver the high-quality service your customers expect.
So it’s important to ask yourself how your business would cope if one of those key people suffered an unexpected illness or injury that took them away from your business for an extended period — maybe even permanently.
What are the risks?
The costs can be substantial. A 2014 report from Oxford University Business College found that it costs more than £30,000 (around $61,500) to replace an average employee, including recruiting costs, lost output while the replacement gets up to speed, and time spent recruiting and training a new worker. 
And that’s just an average employee. The impact of losing a key person can be many times greater. One recent academic study found that a high performer
delivers 400% more value than the average performer.Which
means that unless you protect yourself, the loss of a key person could potentially cost hundreds of thousands of dollars, severely affecting the performance
of your business as a whole, and perhaps even putting your long-term survival in jeopardy.
That’s where Keyperson insurance comes in. Keyperson insurance protects your business from the financial impact of the death or permanent disability of an employee vital to your organisation, combining Life, Total and Permanent Disability (TPD) and Trauma cover in a single policy. The aim is to safeguard the value of vital business assets — the people who keep your business running from day to day.
How it works
The essential difference between Keyperson insurance and standard Life cover is that on the death or disablement of the specified employee, it pays a benefit to the business, rather than the insured person or their family. That gives you the valuable funds to offset the impact on your business.
You may use these funds to cover important expenses such recruiting and training a replacement, covering financial losses from cancelled or delayed projects or funding ongoing business costs.
In summary, Keyperson insurance helps to underpin profitability and business continuity when the unexpected happens.
If you’d like to find out more about the benefits of Keyperson insurance, speak to GSA’s Employee Benefits division. You can email Daniel on firstname.lastname@example.org
Oxford Economics,The Cost of Brain Drain, February 2014.
O’Boyle and Aguinis, “The best and the rest: revisiting the norm of normality of individual performance”,Personnel Psychology, Vol 65, Issue 1, pp 79–119.
Written by Paul Hines