Employment in the UK hit another record level in February, with 29.51 million people now working - three in four (74.9%) of those of working age.(1)

For businesses, however, high employment may actually mean greater problems if a key employee is suddenly unable to work because of serious illness or early death. Then, buying in a temporary or permanent replacement can be difficult and, above all, expensive.

There can be less immediately tangible costs too:

•    A sales director's absence may result in fewer orders.
•    The loss of a production manager may mean delays and consequent financial penalties.
•    The firm's bankers may be reluctant to allow increased borrowings if they know the money is required due to illness or worse.

For many of Britain's 1.2 million businesses that employ people beyond the business owners, the loss of a key employee can even affect their overall financial viability.2

The solution can be simple - money. Extra cash can allow a business owner to buy in resources, pay overtime, sub-contract or pay for whatever other solution is needed to get through the crisis.

The issue is where that money comes from. It could come from the business owners - but that may not be convenient or could create added financial difficulty. Borrowing from the firm's bankers or other backers may be possible - but that is never a certainty and, of course, can take time and will have to be paid back.

The third option may be insurance. Keyperson insurance recognises that many firms have key individuals they rely on to generate turnover or profit. As long as there is a financial need, the business can take out insurance on the life of the individual or individuals concerned, with the funds going to the firm when a claim is made.

Keyperson insurance uses critical illness cover -which pays a lump sum on diagnosis of one of around 30 or more life-threatening conditions - or life insurance. Cost will depend on the type of cover and the individual's age and health, but it need not be expensive and is a proven and reliable way to generate cash when it is needed most.

Is there someone in your business who is essential to ensuring your business targets are met? If so, talk to us now about the options available.

1. National Statistics, February 2008
2. National Statistics, August 2007