People also tend to focus on the people at the top of the company, but other key people could have an extremely detrimental effect on the business if they weren’t around. Mr McLoughlin finds from his experience that various people within a business are key to its success: “it could be a top sales person, financial director or an absolute whiz of an IT person.
“Thinking about it thoroughly is necessary, working out who would be very difficult, time consuming or expensive to replace.”
Arranging cover isn’t always easy though. Protection advice firm LifeSearch has traditionally focused on individual cover, but has gradually moved towards writing more group and business protection policies.
Ricky Butler, director of Best Practice for the firm, said: “One of the most challenging aspects about the group market, compared to individual cases, is that it can often be the harder path to take in terms of workload, quotes and administration – but it can also be the better path for the client.
“We have found group protection and business protection to be very time intensive from an administration point of view, even when using some of the newer systems. However, providing more appropriate cover at a more affordable cost is paramount, and the persistency of the business is generally much better.”
Who stands out in the market?
Victoria Slade, an adviser at Drewberry Insurance, thinks there are some key players in the market who have served to try to educate businesses as to the fundamental risks. “LV= has recently revamped its business protection – and have also provided a range of different useful tools including a ‘Key Person’ calculator which uses the key person’s contribution to the profits of a business to give a ‘suggested’ amount of cover.
“Of course, these serve as a better tool if a person is aligning this with some advice from a business protection expert – as it is not always easy to fully understand and quantify such a person’s contribution. It also has a business risk calculator – which helps clients understand risks of any particular health issues affecting key people within the business, and the impact each person could have on the business.”
Ms Slade also rates VitalityLife, who she says “has a very good critical illness proposition and will pay out on all heart attacks and strokes, whatever the severity, unlike any other insurance on the market. This is a fantastic product for those looking for key person insurance if they are also looking to incorporate critical illness cover within it.”
