Protect your business with Key Man Insurance

Yes. The policy is taken out by the business to cover the life of an employee and so is owned by the business. The business is the beneficiary of any claim which is made; however, the pay-out amount can be used for any reason. This can include payment of staff or covering any profits which may be lost.

This is dependent on the company and the reason for insuring that individual. It can be to cover a loan or investment amount, or it can be contingent on working out the worth of the person to the company. Think about loss of profits, cost of replacement and debts that would need to be covered to keep the company running without that person.

This really depends on how long you think you will need the policy for. If you believe the person you are insuring will be at your company for 10 years, and will continue to be a valuable asset, then you could take out a 10-year policy. Taking out a shorter term may mean having to renew the policy. This can cause additional expense, as the person being insured will be older and may have suffered medical issues. Taking out a longer-term policy fixes the premiums at today's rates.

The cost is dependent on the key person's age, smoker status, health, amount of cover and the term required. Once a policy is submitted to the underwriter, it can be either accepted on standard rates, loaded, with an exclusion, postponed or declined. So, you will not know the exact price of the policy until you have terms issued.

A Relevant Life policy is an individual ‘death-in-service' policy. It pays out a lump sum benefit to the insured's loved ones, via trust, if they die during the term of the plan or they become terminally ill and meet the provider's definition.

Yes, these policies can be ported to a new company or turned into a personal policy, depending on the needs of the policyholder and the plan provider.

People are different, so it's really down to the individual and their role within the business. Relevant Life policies have to end by the employees 75th birthday; however, retirement age, or a fixed period for an employee, could also be considered.

A Keyman Insurance policy can be taken out on any employee who is considered 'key' to the business's profitability and value. This person may not necessarily be a director, partner or shareholder. In contrast, a Shareholder Protection Policy is put in place to protect those who own a percentage or share of the business.

It's a form of insurance that protects the company and its shareholders against the critical illness or death of an owner or shareholder in the company. In the event of a successful claim, shareholder protection can provide a lump sum to the remaining business owners and gives the financial means to buy the shareholding back from the deceased shareholder's estate

Putting Shareholder Protection in place may mean that a business doesn’t have to work with a third party who does not understand the business, potentially can’t contribute to it, or may not want to be involved in its daily activities. Ultimately, the business control remains with the remaining shareholders and the family gets financially compensated for the shareholding.