Key Person Insurance

Key person insurance protects businesses against the loss of profits if an employee becomes terminally or critically ill, or dies. The money can be used to find a replacement. Key person insurance can help keep the business trading.

How key person insurance works

A claim can be made if a key person dies, or is diagnosed with a terminal or critical illness. The payout can be used to help the business while recruiting for a replacement or undergoing reorganisation.

Why it's needed

Businesses need to be insured, but covering for the risk of losing a key employee is not a legal requirement. Because of this, it’s easy for businesses to overlook this protection. But this could be a mistake.

The loss of a key person can impact the business in a number of ways, including:

• Customers losing confidence in the business.
• Banks calling in loans.
• Suppliers asking for payment up front.

Many businesses consider their staff their most valuable asset - and if your client feels this way about their workforce too, key person protection could be the cover they’re looking for.

Key persons in a business

A key person can be any individual who significantly contributes to a business’s financial success due to their:

• Skills
• Knowledge
• Experience
• Leadership

Key people can be found at any level or department of a business, but can include:

• Owners
• Managing directors
• Sales managers
• Research and development staff
• Creative specialists
• Technical experts
• Sole traders