This type of Business Insurance offers financial compensation to a business if an important employee is unable to work due to death, disability or illness. An important employee is most often classified as the owner, founder, CEO or any other person who plays a key role in the maintenance of cash flow. It pays out a lump sum to the business to minimise the financial loss the business might experience if this employee cannot work.
How does Key Person Insurance work?
If an important employee is unable to work, the business can make a claim to its insurance company, who upon approval will pay out a lump sum to the business. The amount of cover purchased is up to the business to decide and should be based on the company’s needs if an important employee were unable to continue work. This covers the business from any financial losses incurred. The business can then use the amount paid out to find a replacement employee, or in the event the business cannot cope financially without this person it can be used to pay off any debts, pay severance packages and close the business down appropriately.
If your business would suffer without the presence of one or a few key people, Key Person Insurance is a vital part of your Business Insurance needs. Compare quotes online with Hippo.co.za to find the right fit for your business and budget, and protect your business today.
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