By Ian Bavey, business protection expert at Seer Green Financial Planning.

Illness, accident and even death is a sad fact of everyday life and can impact on your business in a big way.

It’s also a fact that the majority of businesses have a few people who are essential to their survival. And whether it’s the owners, specific employees or even major customers – without these key people a business will really struggle.

So the question is: “If your business lost one or more of its key people overnight, just how would it survive?”

That’s not only a question that every business owner should be asking, but one they should have an answer for. Latest research from the British Chamber of Commerce shows that the vast majority of businesses have at least one individual who is key to its very survival.

The survey reveals that 95 per cent of limited companies rely solely on one person, 43 per cent of businesses have unprotected corporate debt, 39 per cent of business owners fear their business would fold within 18 months of the death or critical illness of a key individual, and 58 per cent of businesses have no plans in place to cater for the death of a key person.

And that key person can be anyone directly associated with the business, whose loss could cause financial strain to the business – a director of the company, a partner, key sales person, key project manager or someone with specific skills or knowledge that are invaluable to the business.

So just how does a business protect and cover itself from the potentially catastrophic loss of a key member of its team. Key person insurance has become one of the most important forms of business insurance. It’s basically an insurance policy taken out by a business to compensate that business for financial losses that would arise from the death or extended incapacity of the specified key person.

Employers should seriously consider taking out a key person insurance policy on the life or health of any employee (including him/herself) whose knowledge, work or overall contribution is considered uniquely valuable to the company. The idea is to be able to offset any costs in hiring temporary help or recruiting a successor, and to cover any losses from the decreased ability to transact business until successors are found and trained.

The fact is that many businesses today are far more vulnerable than they should be – and in urgent need of this form of specialist protection.

Gwent-based leading corporate pensions, business protection and financial planning specialists Seer Green. Contact Ian Bavey on Newport 01633 816522; email

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