Key Person Insurance (Key Man)
4/5 Sole Traders say there is someone in their business they couldn’t do without. Yet 80% of small businesses aren’t protected for their loss.
– Scottish Widows
What You Get With Key Person Insurance
- It’s inexpensive and crucial for continuity.
- The company will receive a sum of money to cover any loss in revenue.
- It can help with recruitment.
- Sustain the key person’s salary whilst hiring a replacement.
- Avoids the need to borrow money.
- Reduces stress and tides you over a difficult period.
Frequently Asked Questions
Key man or key person insurance is normally taken out by a limited company. However it can be taken out by sole traders as a ‘life of another’ policy. The company or person taking out the insurance must have a financial association with the life assured.
The policy is taken out by the company to cover an employee so the company owns the policy and is the beneficiary of any claim.
You can change the owner of the policy through a “deed of assignment”. These are not provided by the providers and would have to be written up through a solicitor. You may need to change the owner of the policy if your company ceases trading or you leave and want to transfer the policy to a personal cover.
The cost is dependent on the life assured age, smoker status, amount of cover and term.
Once a policy is submitted to the underwriter it can be either accepted on standard rates, loaded, with an exclusion, postponed or declined. It is not possible to know the exact price of the policy until this process is completed, but even at this stage there is no obligation to buy until you are happy.
When a policy is issued at standard rates and the price remains the same as the quote (subject to when it’s started). A loaded premium is when the underwriter sees fit to increase the premium due to possible health issues or something else that has come to light since the original application. An exclusion is normally related to a critical illness exclusion of one or more of the definitions. For example someone may be excluded for cancer if they have previously had cancer. Policies can be declined for a number of reasons but it’s mainly down to someone being too high risk due to bad health.
The owner of the policy has to be a UK company although the lives assured do not have to permanently reside in the UK.
In most cases, yes they are.
Keyman insurance is underwritten very much the same as a normal life insurance product with Guaranteed and Reviewable rates. It really depends on how long you think you will need the policy. If you believe the person you are insuring will be at your company for 10 years then you should take out a 10 year guaranteed or reviewable premium. Taking out a shorter premium may mean having to renew it which will normally mean more expense especially if that person has suffered any illnesses.
Taking out a longer term premium will guarantee the rates (if you take out guaranteed rates) and means you do not have to renew the policy.
Yes, we can arrange a policy to pay out monthly amounts. You may even be more suited to a key man income protection policy.
Yes, critical illness can be added to any key person policy and will be paid to the company in the event of a successful claim.
Key Person Insurance can mean the difference between a business surviving an unexpected illness or death, and not.
Recruitment costs an average of £5000 per position, and that’s just finding the solution!
Key Man Insurance covers you from the financial implications of long term sick leave, permanent absence or death of your most vital members of staff.
How much would your business suffer if you lost a key member of staff through illness or death?
Monday to Friday / 8:30am to 5:30pm
An out of hours service
is monitored for callbacks
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Need more information? Speak to us.
Send us your number, we’ll do the rest.
"…product knowledge is second to none and [Susie] spent many hours arranging the best deal for us and explaining all the jargon in words of one syllable. All the form filling and other minutiae was taken care of for us and whenever we have a query or problem there is always a cheerful and knowledgeable person on the end of the phone…I cannot recommend Susie highly enough, she is super efficient [and] extremely knowledgeable.
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- Jan from Newton Abbot , WCHC Customer
