IT software SME
A small boutique IT software sales company which relied on two key people in very different functions, decided to protect their main assets.
Client: IT software SME
Location: Kent
Service: Key person cover
Description
Our client was in its 6th year and in the IT software sales industry. It heavily relied on two key people: Jane, the financial director of the company, and Bill, the head of sales who was responsible for most of the companies income. The company had not addressed its key person protection requirements, which could leave them exposed in case of the sudden loss of either key person. The company recognized the risks and decided to take action to protect themselves and their business by taking out key person protection life and critical illness insurance for both key persons.
Key Challenges
There were two key considerations. The first was that Bill was responsible for a significant percentage of the gross profit and therefore the level of cover required needed to replace this share of profit rather than covering just the salary Bill received. This was appropriate given Bill’s connections in the industry as well as his product knowledge. The second issue was that Jane was a smoker until very recently and her premiums were heavily rated because of this.
Outcome
We worked closely with the company to find an appropriate solution that provided adequate coverage for both key people. The policy provided a lump sum payment to the company in case of the death or critical illness of either key person, which would enable them to cover the costs of finding a replacement and in the case of Bill, replace loss of gross profit.
Despite the high level of cover, we were able to find an insurance policy that provided coverage for both life and critical illness at a competitive premium. We were also able to find an insurer that would provide a lifestyle review for Jane. This meant that after a certain period of time, she would be able to have some tests, and if proven that she was still a non-smoker, the rates could come down. As a result, the company was able to protect themselves from the risks associated with the loss of either key person.