Key Person Insurance
Key person insurance helps to protect your business
in the event an essential member of your firm
suffers from a critical illness or passes away.
For a free consultation about how we can support
your company and explain the benefits of key person
insurance, enquire today.
Key Person / Key Man Insurance
Key person or keyman insurance is a level of financial protection that businesses arrange to protect their company should an important individual need extended time off due to a critical illness or if they die.What is key person insurance?
The people within your business, whether it’s a product or service driven company, are essential to your success. Decision makers and strategic thinkers lead the business and provide guidance over the company direction, meaning that their loss would be highly detrimental. All employees within a company are valued, but if your company would suffer as a result of the loss of an individual, then it may be pertinent to discuss key man insurance.
Who can be insured?
Anybody within your business can be covered under key person insurance, but it’s usually owners and key people who are responsible for the day-to-day operations that require cover.
The money is paid into your company to help you temporarily or permanently replace the individual. It’s an instant injection of cash to help recruit an equally experienced employee and ensure the business doesn’t suffer long term.
As qualified business insurance advisers, we will discuss with you the tax implications of key person insurance, the level of cover you would require and the benefits.
For advice on key person insurance and how it can protect your business, please get in touch.
Send An Enquiry
How can we help?
When you make contact with Business Protect you can expect to speak to a qualified adviser that’s regulated to give business insurance advice. We start by listening to your needs and understanding how we can assist your company.
The conversation is private and confidential with senior decision makers given all the information to make a decision on which strategy is right for your company.
Enquire today to learn more about how we can support you.
Frequently Asked Questions - Key Person
What are the benefits of key person insurance?
If your business relies on an individual and their loss, due to a critical illness or death, would be detrimental to your company, then key person insurance can help. You would receive a lump sum to instantly recruit to fill the role.
What’s the process for purchasing key person insurance?
The first stage is to talk to a qualified adviser and discuss your requirements. Your adviser will start to develop a plan to best protect your company financially and present the findings. If you decide to proceed, we can arrange for the paperwork to be completed and presented to you for authorisation.
What does key person and critical illness offer my company?
Critical illness offers an extra layer of protection. If an essential colleague to the business is unwell and likely to need extra time to recover, then key person insurance with critical illness cover will pay to find a suitable replacement. This means your business can continue to function with minimal disruption.
What types of companies buy key person insurance?
Any business that employs people that are critical to the success of the business should have key person insurance.
Who is the beneficiary of the insurance policy?
Your business receives the funds if a claim is made.
Who is considered a key person?
A key person is typically an individual who has a significant impact on the success of the business, such as:
- A founder or owner
- A high-income earner
- A skilled or specialized employee
- A sales or marketing expert
- A technical expert
How do I calculate my business's reliance on a key person?
To calculate your business’s reliance on a key person, consider the following factors:
- Salary and benefits: How much would be lost if the key person were to leave?
- Skills and expertise: What specific skills and expertise does the key person bring to the business?
- Customer relationships: Does the key person have strong relationships with customers that could be disrupted if they were to leave?
- Leadership and management: Does the key person have a leadership or management role that would be difficult to fill?
How do I determine the coverage amount needed?
To determine the coverage amount needed, consider the following factors:
- The salary and benefits of the key person
- The cost of replacing the key person
- The impact on business profitability and cash flow
- The length of time it would take to recover from the loss of the key person
Can I insure multiple key persons?
Yes, you can insure multiple key persons with a single policy. This is often referred to as a “keyperson policy” or “key man insurance”.
Are there any tax implications for buying key persons insurance?
Yes, there are tax implications for buying key persons insurance. The premiums paid may be tax-deductible as a business expense. However, it’s important to consult with a tax professional to understand the specific tax implications for your business.