Key Person Cover

What is key person insurance?

It's essentially a life and critical illness policy taken out by the business on those who are crucial to the company's success. One of the great positives of a key person policy is that the premiums are tax-deductible so can provide a great benefit to a business whilst any claim payment is also likely to be eligible for corporation tax relief. 

What does the policy cover?

• Death - the policy will provide a lump sum payment should a key individual pass away
• Critical illness - should the key individual suffer a critical illness or disability, a key person policy can provide the company with a payment when that person is no longer able to work
• Income protection - in some cases a key person policy will pay the business an amount to cover the cost of employing temporary staff whist a key individual is away due to a long-term sickness

Who is a key person?

You can often determine who is a key person by asking:

• Are there any loans or overdrafts that depend on the key person? 
• Would their absence affect business expansion plans or ongoing projects?
• Would the business be in danger of losing customer orders?
• Would it result in a loss of goodwill or hardening of suppliers’ credit terms?
• Would the business miss their administration or management contribution?

Do I need key person insurance and how much does it cost?

If you own a business, you should consider taking out a key person insurance policy. You need to be sure that if the worst should happen to a key member of staff then your business would be able to cope with the change and you will likely need supporting funds in order to do this. 

The cost will depend on a number of factors - including how much cover you need. You would need to establish how much value that person creates and what it would take to cover that amount should they no longer be available to the business. It's best to seek some advice on this. That's where myself and my team, dedicated to this kind of insurance policy, are here to help! 

Let's talk!

If you want to find out more on the topic of key person insurance or if you would like to get a quote, please get in touch with Simon Edgar or one of our team. If you wish to complete the form below, we will get back to you as soon as possible.