People make or break a business. Although we often speak of the resilience of people, unfortunately, we humans are mere mortals and have an annoying tendency to get sick, have accidents, or die. The probabilities are very real. According to a 2022 survey, Canadian workers lost 48.1 days of productivity due to health-related absence and presenteeism [1]. This is up from 41.2 days in 2021, and 40.8 days in 2020.

So, the question is—so what?

Well, business owners should ask themselves (and those advisors who support business owners should ask them): What would happen if your business partner or one of your key contributors died, got sick, or was incapacitated unexpectedly?

  1. Would your revenues or profits suffer within 6 months of this person’s absence?
  2. Would replacing this person take time and capital that would affect your business’s bottom line?
  3. Would the loss of this person put your business at risk to creditors?

If the answer to any of the above is “yes”—or could be true—then “key person” insurance should be considered.

Key person insurance for death, critical illness, or disability can provide an immediate and considerable cash injection into a business after the loss of a key person that can help that business continue to operate in the months that they are missing; help find a successor if that person can no longer be employed; and settle any creditor issues that should arise in the key person’s absence. Key person insurance is a proactive approach to an existential risk.

Don’t put your hard work and main source of wealth at risk.

Let us know if you want to find out more about how to set up “key person” insurance in an effective and cost-efficient manner.