Two thirds of small businesses believe the death of a key employee would have a severe impact on their business, yet few have key employee insurance, according to Scottish Provident.
The research shows that 65% of small businesses fear a key employee dying, but only 18% have cover in place.
And over half (57%) also believe that their business would be significantly affected if a key employee was unable to work for more than six months due to a serious illness.
This lack of cover is even more surprising, given that nearly half (48%) predict a key employee will suffer an illness which means they will be off work for at least six months in the future.
Jerry Bayman, national corporate sales manager at Scottish Provident, believes precious few small businesses seem to be acting to safeguard their company in the eventuality of a key employee's death or illness.
"The statistics are frightening," he says.
"In a business with four key male employees, there is a 29% chance one will die before retirement and a 68% chance that one will have a critical illness.
"However, worryingly, over half (52%) say they don't know what the probability is that one of their key employees will suffer an illness meaning they will be off work for six months or more.
"Our research shows that small business owners need to improve their knowledge of how to protect their business and their employees, in case illness or death should occur," he adds.
