Half Of All Small Businesses Would Have To Close For Good If A Key Employee Died

48% of sole traders would have no form of cover in the event that they themselves fell seriously ill

Half Of All Small Businesses Would Have To Close For Good If A Key Employee Died

Half of all UK small businesses would have to permanently shut their doors if a key employee became seriously ill or died, according to a report by Legal & General.

The State of the Nation’s SMEs’ report, which surveyed over 800 small firms, revealed that sole traders and younger enterprises are the most likely to suffer financially if their workers are suffering physically – with 67% and 73% saying that they would last less than a year respectively.

Despite the obvious risk, a significant number of those surveyed aren’t taking the necessary precautions to ensure their dying workers don’t take them down with them.

Worryingly, 48% of sole traders have no form of cover whatsoever, with 36% of businesses valued at under £250,000 and 35% of first generation family businesses also lacking sufficient insurance.

72% of sole traders and 63% of small businesses with just one owner have no key person cover, highlighting how important it is for businesses to consider protecting their employees against a critical event.

Richard Kateley, head of intermediary development at Legal & General, said:

“Small businesses form the backbone of Britain’s economy and are a vital source of employment for millions of people, yet as our research shows, a significant proportion of these businesses across the UK are leaving themselves at risk from critical events.

“Many businesses insure what they can see and feel, such as their contents, property or vehicles, but many forget about a business’s most important asset – its people. For over half of the small businesses we surveyed to believe they would last less than a year should a key employee die or require a long absence due to a critical illness is a real concern, not just to the business but its other employees.”

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