Key Man Insurance

Insure your key personnel

What is Key Man Insurance?

It is a policy taken out by a business to insure their most valuable employees (key people).

The policy is designed to protect the company from the financial impacts of losing their key people through death or illness. The business owns the policy and is the beneficiary of any payout.

Policies can be taken out as a life only insurance or with critical illness included. The benefit is a tax-free lump sum which is paid to the company in the event of a claim. The cover is taken out over a term, normally a 5 year or 10 year guaranteed premium depending on how long you think it’s needed.

All policies through us can be cancelled at any time without penalty or tie ins.

Who are my Key Personnel?

Your company could have various workers essential to profits. A key person is not always the top sales person or “bread winner”.

A key person could be the brains behind the operation. Maybe someone who knows the design mechanics or engineering details of the main product.

Maybe the creator of the intellectual property, the invention, discovery or design. Many of the people we insure will be directors and managers. But as far as the underwriter is concerned, as long as there is an insurable interest its reasonable for that person to be considered.

Typical key people will be:

  • The office manager – integral for the day to day running of the business.
  • The web developer – without their know-how the companies main shop window could go down.
  • The Founder – The person who come up with the idea and knows the product inside out.
  • Technical Support Manager – Someone your company relies on to keep the IT side running.
  • The man with the contacts – The person bringing in the majority of sales and profits.
  • Top Sales Person – integral for the day to day running of the business.

Calculating Key Man Cover

The sum assured for a key person is really down to the individual business. What would the financial repercussions be tomorrow if that person was no longer around?

Most of the time a business owner will look at the turnover of the company and work out a percentage that the key person brings to the company, then insure for that amount. But it’s worth thinking things through a little more.

  • Covering loss of profits
  • Cost of hiring a replacement
  • Keeping all bills and loan repayments covered.

Losing a key person can have many detrimental effects to the company which can all contribute to the business’s well being. Contracts still need to be honoured and customer confidence will need to be maintained. Key people often have all the client relationships and the know how of the business. So all things considered a financial injection from a policy pay out will help, but some extra thought and contingency planning can also go a long way.

Get in touch today and find out all the ways we can help you.

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