In this short article, Adrian Kitchin, Managing Director of Insurance Advisernet Australia and New Zealand explains why you should protect the key people in your business, including you. An important path to peace of mind for the business owner, allowing them to get on with business without having to worry if they are covered for any eventuality.
Sometimes in a business – well more often than not – there is an unprotected risk for the business owner – and it’s walking around the office or factory – carrying important information with it. Yes it’s your key management or staff – those somewhat indispensable humans who know how to fix that mess, unblock that production line, manage that software – you know the drill.
Very few businesses in Australia have a methodology for downloading information out of the heads of the owner or key staff. The person’s job isn’t a job description – it’s an operations manual – and it’s locked up inside their head and has never been written down.
This operations manual makes that person very valuable to a business and this is the first reason you need to protect that person with some form of key man insurance. At the same time, you should put in place a program of extracting key information from people like this and making sure they keep it up to date as part of their job duties.
The second reason you need to protect key people, is they can be very expensive to replace. It’s not often realised how much it costs to recruit, train and then keep productive the average manager or leader or key staff members. Plus there is the downtime if for some reason they are unable to work for a period of time. So key man insurance is a good way to protect them – and the cost is the second reason.
The third reason you want to try and protect key people in your business with good policies, WH&S programs and insurance is their job becomes yours if they are injured or sick for an extended period. The boss in a business wears all the hats of every employee, and if no-one else can do their job – you’re going to end up doing it. This can tie up your time and resources on other duties like running the business, keeping key strategies rolling out and the like. Either way you’re going to end up with lost production time, or lost prosperity if you don’t have some protection.
The fourth reason is peace of mind. Knowing the key people in your business are protected is as relieving as knowing the building is covered in the event of a fire or flood. It’s just that business owners protect their people a lot less than they do their buildings or property assets.
The final reason is probably the simplest, and yet the most overlooked – it’s simply makes good business sense to protect the things that make you successful. Give yourself a backstop to keep you on track and to continue to reward you for the smart thinking that put your business and these key people there in the first place. You were smart to think about all the things you needed to in order to set up a successful business – now keep it on track with the right protection.
Should you have any questions or wish to discuss Key Person Insurance in more detail, please contact Paul Lewis on (07) 3217 9015.
This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Insurance Advisernet Financial Services Pty Ltd strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances. Insurance Advisernet Financial Services Pty Ltd and its advisers are Authorised Representatives of Fortnum Private Wealth Pty Ltd ABN 54 139 889 535 AFSL 357306. Any personal advice provided by Paul in respect of life insurance products is done so as an Authorised Representative of Fortnum Private Wealth Pty Ltd.
Paul Lewis Authorised Representative No. 262 180 is a director of Lewis Insurance Services Pty Ltd (LIS). Paul and LIS are authorised to provide general insurance services only as authorised representatives of Insurance Advisernet Australia Pty Ltd ABN 15 003 886 687 AFSL 240 549. Paul is also authorised to provide financial planning services only as an authorised representative of Fortnum Private Wealth Pty Ltd ABN 54 139 889 535 AFSL 357 306 trading as Fortnum Financial Advisers and nominee of Insurance Advisernet Financial Services Pty Ltd ABN 19 132 170 337 AFSL 357 306.