Key Man Insurance
If your consulting practice is reliant on a small number of individuals collaborating to secure work with clients and deliver assignments, then the absence of one of those key individuals is likely to have a substantial negative impact on the profitability and possibly the survival of the business.
If a key person (female or male!) is unavailable due to sickness or accident then key man cover will pay compensation to the business to mitigate the adverse financial consequences of the absence.
The financial benefit available under a Key Man policy is likely to be a fixed monthly allowance for a predetermined time period for example cover might be capped at £5,000 per month for six months.
If a Key man dies then some policies will pay a lump sum which can be used to bridge during the inevitable interim period of instability and recovery of the business.
During this time arrangements can be made to replace the skills and experience that have been lost.
Key man cover for consultants can provide valuable protection during a period of unexpected instability and loss.
You should not underestimate the potential negative impact on your business in terms of morale, business momentum, client focus and lost revenue.
Some independent consultants consider Key Man cover to be an essential freelancer insurance requirement.
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