Key Person or Keyman Insurance helps safeguard a business against potential financial loss, caused by a critical illness, terminal illness or from the death of one of the businesses key people. You can have cover for just death, which comes with a terminal illness at no extra cost or add business critical illness cover too. (Business critical illness is more expensive than life on its own as you are much more likely to contract a specified critical illness than die in your working life.)
A pre-determined lump sum is paid to your business if this happens, (We can help you decide the levels for you and your business needs.) you are usually covered for at least 40 critical illnesses, such as but not only; some forms of Cancer, Heart attacks, strokes etc. Some insurers are more extensive.
Who is my Key Person? (Keyman.)
It could be you. A ‘Keyman’ is an employee whose death or continued absence would affect the profits and the running of the business.
The loss of you, an integral employee or other directors may result in reduced sales, a loss of profits/turnover, wasted time, recruitment costs, the disruption of development plans and increased workloads for the remaining staff. Keyman Insurance is a life insurance policy, which can have critical illness added. It is written on the life of a key business employee, but it is owned by the business. If something should happen to that person, the policy is paid out directly to the business. Typically, the lump sum payment is used to either replace the person affected or replace the revenue they would have bought in, but it can be used however you see fit. For this reason, the business pays the premiums and owns the policy.