In all businesses, be they small or large, there is always one asset that can easily be overlooked - key staff/managers/directors without whom the business would struggle.

 

Examples would be:

• a director whose credit rating and guarantees provide loan funding to the business.
• a sales manager whose contacts and ability provide increasing sales to contribute to the profit of the business.
• an administration manager whose ability and knowledge of the business's operations keep the business running smoothly and efficiently.
• a key employee who may have developed the product the business is selling and whose knowledge and on-going development work are essential to the viability of the business if that person was no longer available to the business.

These people are Key Persons and, like any other asset of the business, should be insured. The principle is that the insurance proceeds are to go back into the business to help it survive the loss of the Key Person - the proceeds do not go directly to the business owners and so should be distinguished from Buy/Sell insurance on this basis.

 

They should also be distinguished from "Business Expenses" insurance, which basically covers fixed on-going costs that the business is committed to (such as business overheads etc).