Key person insurance| Doesn’t need to be Complicated

Take our quiz to see how your business needs protection

Key Person Life Insurance

How would your business cope with the loss of a key person? We help protect your business from the death of its key people.

Shareholder Protection Insurance

The death of illness of a minor or major shareholder can lead to massive business problems. Help give shareholder dependents a fair sale price of shares and help remaining shareholders retain the business shared with these important policies.

Business Loan Insurance

Many businesses borrow to grow or invest in expensive machinery or premises. On the death of a director banks often get worried and cancel overdrafts or call in loans. Business loan insurance protects your business from this issue.

Executive Income Protection Insurance

In the event of a long term or permanent illness where a director cannot work anymore then paying their wages can become a burden on the business. Executive income protection give the company the required funds to ensure the director can still be remunerated.

Relevant Life Policy

A highly tax efficient way of offering life cover for company directors. Can now also cover illnesses with the optional employee significant illness cover. Written in trust to ensure tax free payouts.

Key Person Income Protection Insurance

Long term illness of a key person can affect both the income of a business and also in many cases the employee also needs paying. Key person income protection can cover the business for loss of income whilst the employee is not working.

Introducing Key Person Insurance

Often called key-man insurance this type of policy is sometimes miss understood. It is important to ensure that the policy is set up in the correct manner using the right trusts or structure. There are also a lot of confusion and miss information on the tax treatment of these policies. The policy can be for life only or for life and critical illness cover . In another article we also explore key person income protection insurance. The death or illness of a key employee can have  devastating consequences for a business and thus protecting a business from this should be an important part of protecting a business if the financial impact and help the business survive a difficult time.

Here’s How We Work

 

  1. You can either request quotes or contact us to discuss the protection you need.
  2. We’ll provide you with competitive and customized solutions that cater to your specific requirements.
  3. Once you give us the green light, we’ll take care of all the paperwork and even put the policies in trust if required.

Who are the Key Persons of  Business?


The concept of a key person is essential for any business. A key person is someone whose skills, knowledge, experience or leadership are vitally important to the long-term financial success of a company. Examples include company directors, sales directors, IT specialists and managing directors. Companies normally have several key people within their organization who provide expertise in various areas and drive development. Moreover, these individuals are very hard to replace and should something happen to one of them it could potentially cause major financial strain on the business.

Having key people in an organization can be beneficial in many ways. They offer valuable insight into operational decisions and can often times help problem solve difficult situations. Additionally, they can provide strategic guidance when it comes to reaching desired goals and objectives set out by the company. Key personnel are often seen as mentors across an organization that not only lead but inspire those around them. As such it’s important to identify and retain key personnel, otherwise costly mistakes may be made in the future if their absence is not adequately accounted for.

How much cover to Have?

Key person insurance is designed to help protect businesses from the loss of a key individual in the event of death, illness or injury. Calculating how much key person insurance to purchase may seem daunting at first glance, but it can be done if you understand the different quoting methods and calculations used by insurers.

The most common way for insurers to calculate key person insurance premiums and benefits is based on salary multiples; however, sometimes more complex formulae are used. In order to determine an exact amount of coverage that is necessary for a particular business situation, advice should be sought by someone who understands the value of what would be lost with the key individual gone. This may require researching factors such as how hard or easy it would be to replace them, an estimation of how long this process may take and what kind of losses might occur in the meantime regarding profit. Ultimately, with enough consideration and thought given to these issues prior to purchasing key person insurance, this process will remain simple and straightforward.

When it comes to choosing the right amount of cover for a business, there are multiple types of insurance that need to be considered. Depending on the particular circumstances of the business, an effective cover plan could include multiple of profits insurance, allowing businesses to protect their profits if anything unexpected was to happen. Alternatively, multiple of salary would help to cover additional costs such as recruitment and replacement in the case of an employee leaving. Loan security is another key type of insurance which can ensure that any outstanding loan payments are managed and paid off should anything go wrong.

It’s important to consider other types of insurance too, depending on the individual needs. For example, businesses in their start-up stages may want to invest in both recruitment cost and business start-up coverage. This will provide extra protection and enable them to get back up and running quickly should something unexpectedly occur during this foundation period of trading. In addition, there are more specialist forms of insurance such as cyber liability or legal defense that can help protect your business from anyone making a claim against you if things don’t entirely go according to plan.

Tax Treatment of a Key Person Insurance Policy

Key person insurance is an important tool for businesses, ensuring the continuity of the business in event of sudden death or incapacity of a key employee. The tax implications for key person insurance, however, can be complex. In general, if the company meets certain criteria then it can claim corporation tax deduction on premiums paid. Payouts are typically treated as business revenue and are therefore taxable. However, this is not always the case so you need to ensure you take the right approach from a tax perspective. It is important to consider grossing up any payouts to make sure that the net figure still meets your needs after any applicable taxes are taken into account. We at have extensive experience in this area and can help ensure optimal tax outcomes when it comes to key person insurance policies.

Keyman insurance can be an invaluable asset to a business, allowing them to cover the loss of valuable personnel such as Executives or Board Members. Often, premiums for keyman insurance are tax deductible provided certain criteria are met. Generally speaking, for the policy to be eligible for corporation tax relief it must be used to compensate for profit loss should a key individual die, have a limited term of 5 years or less and must not be convertible into another type of policy. Tax regulations vary from region to region however; therefore each business should speak with its local tax inspector to grow greater clarity on this matter before taking out any kind of coverage.

Taking out keyman insurance is a major financial commitment and understanding the full implications of the purchase is essential. Knowing if the premiums can be deducted from taxes could give an extra boost back into the budget that could then help towards taking out more powerful policies with larger coverage. Depending on location, government regulations may allow certain types of insurance deductions; therefore it is always best to consult with assigned professionals for reliable answers about eligibility requirements and tax deductions pertaining to this type of coverage plan.

Who can have Key Person Insurance

Any business looking to protect their business from, life cover, terminal illness, critical illness cover (covering illnesses such as heart attack, stroke, cancer). As will as the typical limited company businesses key person cover can benefit sole traders and partnerships. As mentioned above it is important to get the right level of cover, set up in the most tax efficient manner to give peace of mind, protect the business profits and reduce business risk from the loss of a valuable employee. It gives a much needed cash injection to give cash flow by means of a lump sum payment.

Here’s How We Work

 

  1. You can either request quotes or contact us to discuss the protection you need.
  2. We’ll provide you with competitive and customized solutions that cater to your specific requirements.
  3. Once you give us the green light, we’ll take care of all the paperwork and even put the policies in trust if required.

Insurance Companies we deal with

We are independent so we deal with lots of insurers

As an independent broker we can shop around the market for you. This enables us to get you the most competitive premium for your circumstances. We also have a good understanding of the underwriting requirements that apply with a Relevant Life Policy.
This enables us to match the insurer with your unique sums assured and cover needs.

What Our Clients Say

Some kind words from our respected clients

Speak With an Agent

If you have any questions or would like to learn more about our business protection insurance products and services, we invite you to contact us today. You can reach us via email or by phone.

Don’t wait until it’s too late. Contact us now to learn more about how we can help you protect your business and secure your future. We look forward to hearing from you soon!