Keyman insurance protects your business against the financial impact of losing a key member of staff
Individuals who make a key contribution to the continued financial success of a small Company should be covered. This could be based upon their leadership abilities, their experience of the business, together with their individual skills and knowledge of how the business operates. For a small Company to suddenly lose this type of person can sometimes result in the failure of the business if measures are not in place to provide funds to train and recruit a replacement. In addition, the profits of the business could be severely affected until the replacement is on board, and the additional cash provided from the insurance policy can be used to offset any short term losses. See below for further details.
Types of Cover Available
Life Insurance Only
Provides a lump sum in the event that the key person should die or become terminally ill during the term of the cover.
Critical Illness Only
Provides a lump sum in the event that the key person develops any of the illnesses defined in the policy document during the term of the cover.
Life & Critical Illness Cover
Provides a lump sum in the event of the key person passing away, becoming terminally ill or being diagnosed with one of the defined critical illnesses under the policy during the term of the cover.
What is the Value of a Key Person?
This will vary from business to business and you should carefully review the impact that the loss of the particular person could have with your financial adviser. If you took a Sales Director as an example it would be necessary to evaluate the potential loss of profits that would result if he were suddenly no longer able to generate sales, as well as thinking about the likely costs of recruiting and training a replacement, and how long it would take the new individual to achieve a similar level of sales.
Tax Treatment of Policies
As a rule of thumb policies will incur a tax liability either on the way in or on the way out of a policy. What this means is that if the premiums have been subject to tax relief, then the proceeds will probably be tax free, but if the premiums have been subject to tax relief, then the proceeds will be liable to tax.
Contact us
Our qualified advisers will discuss your requirements and search the market to find the right cover to suit your business needs and your budget. Contact us today for your free, no obligation quotes.