A business owner, director or any employee with specialist skills

Key Person Protection


What is Key Person Protection?

Key Person Protection is a life insurance policy (with critical illness cover if selected) taken out to cover the life of a key person within your business.

When business owners are asked what company assets they have insured, they generally include premises, plant and machinery, vehicles, computer equipment and so on. They know they need cover for the cost of replacement, potential loss of profits and ultimately to minimise any business disruption.

However, what would happen to the company if a key employee, director or shareholder were to die or become critically ill? The cost to the company could be devastating.

Who is a key person?

A key person is anyone whose death or disability would have a serious effect on your company’s future profits. Each policy will have a slightly different definition of a ‘key person’. However, generally speaking, key person insurance can cover anyone who is essential to the financial success of your company.

Some companies will have several key individuals, others only one. Identifying who is key requires a thorough understanding of the business itself. Key persons are usually the founders and directors. But it can also include employees who generate a large percentage of profit and those with a niche talent or specialist knowledge base.

Key person protection can protect your business against the financial repercussions of losing a person integral to the success of your company.

A lump sum is paid-out directly to the business and this can be used to cover the cost of any profit losses, replacement staff, or loan repayments. It can help to keep you afloat during a difficult time.


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Key person cover is not classed as a benefit-in-kind because the lump sum does not go to the employee or their family. Key person insurance is taken out by a company on an individual. This means the business owns the policy and is the beneficiary of the claim. The premiums are usually tax-deductible as long as certain criteria are met.

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