There are around 4.9 million companies in the UK and 98% of them employ fewer than ten people. However, research released in May 2017 by Legal & General in its “State of the Nation’s SMEs’” report has found that at least 48% of them would have to permanently close down if a key employee became seriously ill or died. This is simply because they don’t have key person insurance (KPI), which is sometimes called key man insurance.
KPI is designed to pay out a cash lump sum to the company to protect it against any loss of profits and ensure business continuity should a key individual become critically ill or die. Most companies don’t have this type of insurance cover as they think it’s going to be prohibitively expensive, but we’ve found quotes offering £200,000 of KPI cover for a little over £2 per week. You can obtain KPI via a broker or by going direct to an insurance provider. It’s also available for sole traders and small businesses that work under a different structure, e.g. LPs.
We as a practice highly recommend that our clients should have this cover in place and especially while you can obtain tax relief for the premiums which may very soon no longer be the case. Please do contact us if you would like some further advice on this subject as we have excellent professionals who can help to arrange this type of cover for you.