Key person cover, for the people a business can’t lose.
Most small businesses depend on one or two people. If they died or fell seriously ill, profits, contracts and confidence could go with them. Key person cover gives the business time and money to recover.
A lump sum paid to the business if a key person dies or is diagnosed with a covered critical illness, to cover lost profit, recruitment and breathing space.
Is it right for you?
Owner-managed businesses where one person wins most of the work
Firms relying on a specialist, salesperson or technical lead
Businesses with lenders or investors who need reassurance
How it works
The business owns the policy, pays the premiums and receives the payout. The amount is usually based on the person’s contribution to profit, or the cost of replacing them and steadying the business while you do.
Working out the figure
We look at profit contribution, salary multiples and any loans that would be called in. Insurers have their own rules on how much is reasonable, and we’ll explain what they’ll accept.
Tax
Premiums can sometimes be treated as an allowable business expense, which affects how the payout is taxed. This depends on HMRC rules and your circumstances, so we’ll recommend you check with your accountant.
The choices, explained.
There’s no single right answer. These are the decisions we’ll go through with you, so you understand exactly what you’re buying.
Life cover
Pays out if the key person dies during the term.
Life and critical illness
Also pays on diagnosis of a covered serious illness.
Key person income cover
Monthly payments to the business while the person is off sick.
Multiple key people
Separate policies for each person, sized to their role.
A five-person engineering consultancy
The managing director brings in most of the firm’s contracts. We arranged key person life and critical illness cover owned by the company, sized to two years of her profit contribution.
If she were lost to the business, the payout would fund a replacement and keep the team paid while clients were reassured.
An illustration of how this cover can work, not a real client. Your own recommendation will depend on your circumstances.
Key person cover: your questions.
Can’t see yours? Call us, we’re happy to talk it through.
All FAQsWho owns a key person policy?
The business. It pays the premiums and receives any payout.
How much cover can a business take?
It’s usually based on a multiple of the person’s salary or their share of profits. Insurers set limits, and we’ll explain them.
Is it the same as shareholder protection?
No. Key person cover protects the business’s finances. Shareholder protection funds the purchase of an owner’s shares. Many businesses need both.
Ready to talk it through?
No call centres, no scripts. Just a real person who’ll listen, explain your options in plain English and help you decide.