When you hear ‘key people cover’, a number of your partners, directors, managers or other employees may spring to mind as the most important people in your business. Whether they are crucial in day-to-day operations running smoothly, whether they developed your product and know it inside out, or they’re key in generating profit, it’s important to have cover in place to support your business if something should happen to them.
If a key person in a business dies, it can have a severe financial effect. You can help safeguard your business against the death, terminal or critical illness of a key person with Key Person Insurance.
What is Key Person Insurance?
Also known as key person protection or key man insurance, Key Person Insurance is a business insuring itself against the financial loss it would suffer if a key person in their business died or were diagnosed with a specified critical illness during the length of the policy. It can also pay out if the key person is terminally ill, providing that the illness is specified in the policy.
I think I’m a ‘key person’. Who takes the policy out: me or my employer?
Key Person Insurance is a life assurance or life assurance and critical illness cover policy taken out to cover the life of a key person within a business. The policy is owned and paid for by the employer, so any pay out is payable to them to cover their loss of you, and your role in the success of the business.
What’s the difference between life insurance and Key Person Insurance?
Life insurance is taken out by an individual to compensate their family, or to take care of their affairs (such as a mortgage or debt), in the event of them dying.
On the other hand, Key Person Insurance is cover against losing a person of value to a business. Losing a key person in your business could have a devastating impact, with sales and profits falling and an increase in workload putting pressure on the remaining staff. Key Person Insurance is paid out on the death of the insured key person, during the length of the policy. It is paid as a lump sum and could have a significant impact on the business’ ability to recover. Proceeds from the pay out can be used to help replace lost profit, or put towards recruiting a replacement.
We offer personal life insurance, key person insurance and a range of insurance solutions for you and your business. If you’re interested in any of these cover options, or if you’re still unsure about which type of cover is best for you, give our friendly team a call on the number below.