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Key Man Insurance

Protect against the financial impact that occurs when losing an essential staff member.
Get a free Key Man insurance quote today, prices start from just £2.50* per week.

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What is Key Man Insurance?

Key Man Insurance is used by businesses to ensure they have protection should a highly valued employee, or Key Man, be unable to work. A Key Man can be described as an employee whose absence would cause a severely detrimental effect to the efficient running of a business. For example, this could mean their absence causes a drop in profits or the daily business functions are unable to continue.

Losing a vital staff member or a company director could have a dangerously adverse effect and could result in a decrease in sales and profit, additional costs in hiring a replacement, or added stress and workload for colleagues.

Key Man Insurance is a tax deductible business expense, find out more about it now.

Who Is Considered a Key Man?

This is entirely dependent upon the type of business and the nature of their industry or trade. A software development company would consider the loss or absence of a software programmer as extremely detrimental to their productivity. Whereas for a sales company losing a director of sales could have an immediate impact upon profit. In broad terms, a Key Man is any individual in whose knowledge, skills or experience a company relies on to function profitably.

Why do I need Key Man Insurance for my business?

Key Man Insurance policies are owned by the business and not the individual employee that is covered. So no matter the reason for the absence of a Key Man, the business should be protected and reimbursed financially by this tax deductible expense.

The policy could also include Critical Illness cover so should there be a longer period of absence, the financial stress and implications of this could already be taken care of, reducing the pressure on other staff members.

Key Man Insurance

Protects against the financial impact that occurs when losing a essential staff member.

Prices start from just £2.50* per week


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Frequently asked questions - Key Man Insurance

Please drop us a message if you have any queries. Here are the most commonly asked questions about key man insurance.

What is Key Man Insurance?

Key Man insurance is an employee insurance policy on a business' key individual employee. A policy is taken out by the corporation and it is used as a means to shield the business against the long term absence or resignation of the most important members of staff. In most cases the individual is valued as an irreplaceable employee who either contributes directly to profits, or has knowledge or experience that is essential to the business or corporations' success. If the insured individual becomes critically sick, injured or passes away, a Key Man Insurance policy would be used to issue an amount to offset this loss. This amount is then paid to the corporation.

Who can buy Key Man Insurance?

Key Man Insurance Policies are taken out by a company (either a Limited Liability Partnership or a Limited Company) or sole traders. However, as this type of policy involves another person (known as a life of another policy), the company or trader must have a financial relationship with the person or persons covered by the policy. This means that the insurance policy is owned by the company/trader/organisation and pays out to them should the insurance be claimed.

Can the Insurance Policy Change Hands?

Key Man Insurance Policies can be changed using a deed of ownership. This could be done if the owning company changes name or closes. This cannot be done without a solicitor to arrange and write the changes however.

How Much Does Key Man Insurance Cost?

The cost of the policy, like most forms of life insurance, is dependent upon the health, age and status of the individual cover is needed for. There are also other factors such as cover period, cover amount and exclusions to factor in. You may not see the total cost of the policy until it has been underwritten and the full terms are issued.

What Exclusions could apply?

Exclusions could be applied to the policy after certain factors are considered. These could be things such as family history, health, lifestyle and apparent risks, all of which could all affect the cost of a Key Man Insurance policy. This is no different to the effect they would have on life insurance or health insurance. An Exclusion is a clause that could be added and would exclude a certain term or condition that means the policy will not pay out. An underwriter could decide to add an exclusion to the policy that states someone with a previous heart condition will not be covered for illnesses related to this pre-existing condition.

How Quickly can a Policy be Set-up?

This varies greatly depending upon the circumstances of the individual for whom cover is required. The application process is fairly straightforward and standard and once an application is submitted it could potentially be accepted by the underwriter immediately. However, there is a possibility that further information will be required, depending on what is entered in the application process. There may be a need for further clarification from medical professionals regarding an individuals' health status, in which case it could take as much as a few weeks to issue the terms of the policy.

How much Cover can be Provided?

The range of cover provided from Key Man Insurance is entirely dependent on the company and the individual concerned. Things to take into account when calculating the cover required are the impact on profits, the worth of the persons' position, the cost of hiring replacements, etc. The company would need to consider how much they stand to be impacted by the loss or absence of the person. Cover can be provided for Critical Illness within the Key Man Policy and it would be worth ensuring that total coverage is taken out so all eventualities are provided for should the absence of a Key Man become a reality.

How long should a Policy be taken out for?

The length of cover needs to be taken into consideration when considering acquiring a Key Man policy. This is calculated by taking into account how long the person may be employed by the organisation. Renewals can be expensive and add to the cost of the insurance so it may be worth ensuring that a policy is issued to cover the maximum period a Key Man (or men) could be employed. This may mean that younger individuals have a policy spanning a longer period than an older person as they will have more time until they consider retiring.

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