Critical Illness Insurance A cheap alternative to Keyman Insurance?
If you run a small business you know that if a member of your team was taken seriously ill or died, your business would be hard hit. Sales or production could fall, key skills could be lost and the general pace of the business could fall.
Insurance is available to offset those financial risks, risks that are potentially most serious in a small business. After all in smaller businesses other employees can’t be moved across to fill the gap - there’s simply noone spare so the problem remains until the person either returns to work or has to be replaced.
If the person is off sick with a serious illness such as cancer or a heart attack you simply don’t know when, or if, they’ll return to work and management is caught in a cleft stick. Do they take on a temporary employee or a permanent employee, or are you forced to simply wait until matters resolve themselves? And how much will all this cost the business in terms of both extra costs and lost sales and profit?
Traditionally, it’s Keyman Insurance that’s covers these very real risks but nine out of ten small businesses still don’t carry this insurance. It’s either because they haven’t thought about it or they’ve found it to be too costly.
A spokesperson for the Federation of Small Businesses said, “In an ideal world, small firms would be insured against everything, but reality demands the businesses prioritise threats and occasionally take risks”.
But there is a cheaper potential solution. It’s called Group Critical Illness Insurance and it’s about half the price of standard Keyman Insurance.
With Group Critical Illness Insurance, the company decides which employees to insure and how much to insure them for, pays the premiums and receives all lump sum payouts. Claims can be made as soon as any of the insured people are diagnosed with a scheduled critical illness and the policy will list a long list of chronic illnesses that are covered. As you would expect heart attacks, strokes and cancer are the biggest three biggest reasons for claims but the full list is much longer. For example, kidney failure, meningitis, CJ Disease and even blindness.
The important point to realise is that for the company to make a claim, the insured employee must survive at least 28 days after they are diagnosed with the critical illness. (Some insurance companies have now reduced this to 14 days so please check before you buy.) So if the employee died before the end of the survival period, the claim would be invalid. In that context, it is not as comprehensive as full Keyman Insurance – but at around half the price of Keyman Insurance there has to be a little compromise!
Simon Burgess, the Managing Director of British Insurance says: “Group Critical Illness Insurance is a real alternative to full Keyman Insurance and at around half the cost, it’s great value for money. If business managers find Keyman Insurance too expensive there’s little excuse for not filling most of the gap with Group Critical Illness Insurance. Don’t pay the price for apathy”.
