By Claire West
Two thirds (65%) believe that a key worker’s death would have a severe impact on their business
Yet less than one fifth (18%) have key employee insurance
New research commissioned by Scottish Provident has revealed the reliance of small businesses on their key employees; with two thirds (65%) of those questioned believing the death of a key employee would have a severe impact on their business. Despite this, less than one fifth (18%) of those small businesses have taken out key employee insurance to safeguard themselves should this happen.
And it isn’t just the permanent loss of an employee that these fears apply to. Over half (57%) also believe that their business would be significantly affected if a key employee was unable to work for more than six months due to a serious illness.
While most small businesses won’t be able to plan when an employee could be off work due to illness, nearly half (48%) 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, National Corporate Sales Manager, Scottish Provident, said: “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. However, worryingly over half (52%) of small businesses questioned state they don’t know what the probability is that one of their key employees will suffer an illness meaning they will be off work for 6 months or more.
The most common reason for not having key employee protection cover is ignorance, with over one in three (34%) of small business owners questioned claiming that they have never thought about protecting their workers under such a scheme. A further one in four (25%) believe that it would be too costly for their business.
Jerry Bayman continued: “Our research shows that small business owners need to improve their knowledge of how to protect their business and their employees, in case illness or death should occur. Seeking whole of market advice from an IFA is vital, as they can provide expert financial advice for your individual business needs and ensure you have the level of protection you require. Price should not be a limiting factor, as the cost of key employee protection cover has fallen considerably over the past few years, and therefore could provide small business owners with an affordable option that gives them peace of mind.”