I suppose that I have been out of the spotlight for a number of years and it is fair to presume (incorrectly for the moment) I had died and gone to that great criticalillness gathering place in the sky or maybe down below.
However, as some will know, I am still active in giving advice and, lo and behold, a new generation of clients are being shepherded to my door by their parents and friends. So, it came as a shock to me that while I have considered myself to be key to my business and as I have always advised clients who have businesses to insure their keymen (yeah, I know, keywomen or keypersons) I had neglected to glance at my own business and left myself in the invidious position of employing four members of my staff whom I realised were key to my business and, like all cobblers, I had need to mend my shoes!
Let’s examine what the Collins English Dictionary defines as a “keyman” – chief, crucial, decisive, essential, fundamental, important, leading, major.
Now Wikipedia – keyperson insurance, also formerly called keyman insurance, is an important form of business insurance. There is no legal definition for “keyperson insurance”. In general, it can be described as an insurance policy taken out by a business to compensate that business for financial losses that would arise from the death or extended incapacity of the member of the business specified on the policy.
The policy’s term does not extend beyond the period of the keyperson’s usefulness to the business. The aim is to compensate the business for losses and facilitate business continuity. Keyperson insurance does not indemnify the actual losses incurred but compensates with a fixed monetary sum, as specified on the insurance policy.
An employer may take out a keyperson insurance policy on the life or health of any employee whose knowledge, work or overall contribution is considered uniquely valuable to the company. The employer does this to offset the costs (such as hiring temporary help or recruiting a successor) and losses (such as a decreased ability to transact business until successors are trained) which the employer is likely to suffer in the event of the loss of a keyperson.
However, try insuring your PA, your business administrator, your trainee adviser, your technical research assistant, and you will find that LV does not consider that the engine of the business is key.
No problem with “sales” being key but with our masters breathing down our necks (quite rightly) to provide an efficient administration service, sales are not the only key factor in a business.
I have suffered the cost and inconvenience of a superb administrator being unable to work due to ill health. I dread the thought that my PA (she who holds the key to my being in the right place at the right time) not being there to get me dressed and with my satchel and sandwiches. My “new business administrator” knows my clients. She has read their personal files and treats my clients with respect and provides the personal attention they deserve. It takes many months for someone to learn the ethos of my business and this is the most important part – to connect to the clients in such a way they will discuss their personal lives and problems with her.
For the sake of LV, we shall call it TCF which, according to the FSA, stands for treating customers fairly, a lesson waiting to be learned by LV.
Now we turn to my trainee adviser. I have invested 25 years in this young man and nurtured him through school and university, investing thousands of hours in cloning a mini me. Is he a keyman? You bet he is and I will be lost without the knowledge he has accumulated in life’s journey to one day hopefully accept the reins of JJFS and guide clients he has grown up knowing as friends of the family.
I was subject to a “grilling” from their senior under-writer as to why I had decided to submit business to them now when I had not done that much business with them in recent years.
LV’s senior underwriter’s attitude along with their reinsurer will ensure that my choice of provider with whom I wish to do business is made just that little bit easier.
It is time that people in ivory towers realised they exist because we at the coalface know and understand our client’s requirements. We investigate why certain policies are required and try to calculate the affect on a business or family in the event of the severe illness or death of a person.
One thing is for certain – in my business life, the attitude of those who should be welcoming business and going out of their way to accommodate the requirements of the businesses and the families we propose should be one of respect and they should work with us, not against us. Any IFAs in a similar situation can contact me and I will let you know who will accept applications to cover their key members of staff.
John Joseph Financial Services