New research from Scottish Provident shows the reliance of small businesses on their key employees; with two thirds believing the death of a key employee would have a severe impact on their business. Despite this, less than one fifth of small businesses have taken out key employee insurance to safeguard themselves should this happen.
And it is not just the permanent loss of an employee that these fears apply to. Over half also believe that their business would be significantly affected if a key employee were unable to work for more than six months due to a serious illness.
While most small businesses are unable to plan when an employee could be off work due to illness, half predict a key employee will suffer an illness, which means they will be off work for at least six months in the future. This highlights the necessity to ensure that individuals have adequate critical illness cover should they be unable to work due to illness.
Jerry Bayman of Scottish Provident says, "While small businesses are undoubtedly concerned about losing a key worker to a critical illness or death, precious few seem to be acting to safeguard their company in that eventuality. The statistics are frightening; in a business with four key male employees, there is a 29 per cent chance one will die before retirement and a 68 per cent chance that one will have a critical illness. The most common reason for not having key employee protection cover is ignorance, with over one in three small business owners claiming that they have never thought about protecting their workers under such a scheme. A further one in four believe that it would be too costly for their business. Small business owners need to improve their knowledge of how to protect their business and their employees, in case illness or death should occur. The cost of key employee protection cover has fallen considerably over the past few years."
Life insurance: News update: 20 June 2010