Businesses are severely underestimating the financial losses of a key worker being absent for a subs...
Businesses are severely underestimating the financial losses of a key worker being absent for a substantial period, writes Adele Burton.
Research compiled by Royal & SunAlliance has shown that a fifth of those surveyed estimated a loss of £50,000, whereas the figure would be around the £300,000 mark, according to Royal & SunAlliance figures.
Despite 75% of the 135,000 companies polled believing they would suffer financially if a key employer were to fall ill or die, only half of these had some kind of business protection insurance in place.
Mark Edwards, personal market leader at Royal SunAlliance, said: 'One of the main reasons for this under-insurance in the market is that businesses do not know what insurance they need. Many have the wrong type of insurance.
'Of the businesses surveyed, 69,000 thought a group income protection policy would cover them for key employees and 47,000 thought that private medical insurance would cover their business for financial loss.'
From the businesses surveyed two-thirds of medium-sized companies relied on one or two people for their business success or survival, a clear indication of the importance of business protection and even some who believed they were covered still had the wrong type of insurance. Out of 57,000 companies that said they had cover, 11,000 had the wrong type of protection in place.
Edwards added: 'Of the businesses without insurance, two-thirds said they did not need it, over a third said they had other types of insurance and a third had never heard of key man insurance.
'The research identifies to IFAs that business protection is a large market and one which could have large rewards.'
