Majority of SMEs lack protection for key workers

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The majority of small and medium sized enterprises (SMEs) have no key worker protection in place, despite death of a business owner emerging as the most disruptive potential scenario a business can face.

An investigation into the protection habits of 500 UK businesses commissioned by Legal & General found that death of a business owner was identified as the most disruptive possible scenario by 43%, compared with 23% who specified fire damage and 14% who cited critical illness. 

Despite this, 57% of do not have any form of protection to safeguard the business against the risks associated with losing the owner.

The results show 12% of SMEs owners predict their business would cease trading immediately as a result of the death or critical illness of a key worker or business owner.

A further 42% said their business would ultimately cease trading as a result but over a longer period of time. Of these, 25% per cent would expect to cease trading within the first year, 6% within the second year, and 11% after two years.

Legal & General head of specialist protection Clare Harrop said: "Despite almost half of SME owners stating death of a key worker as the most destructive scenario to their business, it's staggering that only 43% of businesses have actually implemented any form of business protection to safeguard their business in this kind of scenario.

"Cost is clearly front of mind for all businesses in the on-going financial climate, but you never know what lies around the corner. Losing a key worker can have a huge impact on any business, whether from the aspect of sales, turnover or recruitment."

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