You'd be a muppet not to consider KPP
DO you know that Mickey Mouse didn't marry Miss Piggy until 2004, even though they had planned their big day for fourteen years earlier?
It was all down to the financials – her company didn't have key person protection (KPP). KPP is an insurance that pays out, not to you as an individual, but to your company, giving a cash injection in the event of the death of a main person, for instance the managing director, finance director, or one of your main creative helpers.
Disney had been on the point of taking over the Jim Henson Company (creators of Miss Piggy and the Muppets) in 1990, but the deal fell apart when Henson himself – the creative genius behind the Muppet characters – suddenly died.
The collapse of the talks cost the Henson Company dearly, in terms of missed opportunity. Had they had KPP in place, the company could have received a major insurance payout that would have gone a long way to softening the blow of losing Jim.
And so it would be another fourteen years before Mickey and Piggy would walk down the aisle together at last. In 2004, Disney finally acquired the rights to all the Muppet characters, the Muppet movies, and Henson's last great creation, ‘The Bear in the Big Blue House'.
Your company, or the company where you work, could also benefit greatly from KPP, which has also been known as key man cover or key man insurance. It is a great way for a business to cover itself against the death of a key person within the business, and as I say, the policy is owned by the business and pays out to the business in the event of a tragic death.
When a driving force in your company dies, a business can suffer badly, with an impact on sales and profits, possibly even losing main customers, and incurring increased workloads for others as you struggle to find a replacement. A KPP policy can also include critical illness cover, so that if the key person has to stop work due to a major illness such as cancer, heart attack, or stroke, there is a payout to tide the business over until their return.
What are the consequences of not having KPP to see you through this kind of crisis? Legal and General did some research on businesses that went bust following exactly the kind of disruptive event described above, but which did not have KPP in place to help them. They found that 80 per cent of the owners believed a KPP policy would have saved their firm.
Of course, it doesn't have to be limited to managers: KPP can cover the loss of your head of product development, your product designer, even your top salesman. KPP is a sensible option for any company where there are several key people, whether in a formal or informal partnership situation.
Would it be worth thinking of Key Person Protection for your company? You'd be a muppet not to!
:: Michael Kennedy and Shaun Doherty are independent financial advisers and pensions specialists, and can be contacted on 028 71886005. Further information is on the Facebook page 'Kennedy Independent Financial Advice Ltd' and the website www.mkennedyfinancial.com