Key Person Insurance

Key Person Insurance allows a limited company to plan for the potential financial loss that it would suffer on the death or serious illness of a key employee.

What is a key person?

  • A key person is any person on whom a business depends for continued success & profitability
  • Can be an employee or a director
  • must have an employer/employee relationship
  • Found within Limited Companies, Partnerships & Sole Traders

Why have Key Person Insurance in Place?

  • Often in small to medium sized company, success & profitability may depend on one or two employees
  • There may be extended delay & more expenses in recruiting a replacement. Consultants may need to be employed
  • Occasionally, there may be loans recalled by the lender or loans may be repayable to legal rep. of deceased

Level of Cover

  • Must equate, as accurately as possible, to the drop in profitability as a result of the loss of the services of the insured individual (key person)