A Key Person Insurance policy is taken out by a business to insure the most valuable members of staff.
Without keyman insurance, your business is at risk!
All policies can be cancelled at any time, you are not tied in.
According to statistics, only 28% of UK businesses established in the last two years have any kind of business protection in place. Yet 46% would cease trading immediately if a key person died.
Take control of your business’s future and safeguard it from potential losses – secure a policy today!
Your company could have various workers essential to profits. A key person is not always the top salesperson or “breadwinner”.
Key man insurance rates are based on each individual life assured. It’s calculated much like normal term life insurance.
Insurance Do I Need?
It’s down to the business to decide the level of cover for a key individual. If your key person brings in £100,000 per year then maybe that’s the sum needed.
In most cases, key person insurance will be treated as a business expense and is therefore tax deductible.
For an in-depth guide please check out our blog post on key man insurance taxation.
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We received a wonderful service from mykeyman and will be using them again. The service and product knowledge from team is excellent. Everything was made easy to understand. The price was the best we found too.
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The standard of service from MyKeyMan was first class. They kept me up to date with progress on my Relevant Life Policy, followed up promptly following delays caused by my medical practice being slow in compiling reports, and responded instantly and clearly to any questions I had.
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All you need to know and more.
If a policy is being set up to cover a loan, the lender will often ask that the policy be assigned. This will mean that in the event of a claim, the money will be paid directly to the assignees. The bank or lender should be able to provide you with the assignment documentation. The company or employer will still be the legal owner of the policy.
Life Only Key Person Cover
A life-only policy is much like straightforward cheap life insurance. A person is insured for a sum of money which is paid out on death. The only variation from different providers will be whether the terminal illness is normally always included. Life Only can be taken out with a level term or decreasing sum assured.
Life & Critical Illness
Critical illness cover can be bolted onto the key man cover or taken out on its own. A life and critical illness keyman cover will pay out a lump sum on diagnosis of a critical illness as set in the definitions of the policy. Over 70% of claims are for heart attack, stroke and cancer. Critical illnesses covered will vary between providers, but most will abide by the rules set out by the ABI.
Key Man Income Protection
Keyman income protection is another option which can sometimes be more suitable. It will pay out a monthly income to the company if the life assured is unable to work. This could be due to sickness or injury.
Income protection policies are normally taken out on a shorter term, and the benefit pay-out is normally limited to 12 to 24 months. There is also a set deferred period of no less than 4 weeks, which means the key person would need to be off work for at least 4 weeks before the benefit would start to pay out. You will need to have more than 2 employees and the life assured can not be liable for more than 70% of company profits.
This depends on age, health and sum assured. Policies over £500,000 normally always require a medical no matter what provider is used.
Yes, critical illness cover can be added to any key person protection policy. This is something we advise doing. Any payout will be paid to the company in the event of a successful claim.
Yes, we can arrange a policy to pay out monthly amounts. You may even be more suited to a key man income protection policy.
It depends on how long you think you will need the policy. If you believe the person you are insuring will be at your company for 10 years, you should take out a 10-year policy. A 5-year policy will be cheaper in the short term but will need to be renewed if the person is still at the company. Premiums will be higher when taken out older, so securing a premium for a longer term will always be the best advice.
You can cancel key man cover without penalty so there is no risk of being tied into a policy you no longer need it.
Keyman person cover is normally taken out by a ltd company. However, sole traders can take it out as a “life of another” policy. The company or person taking out the insurance must have a financial association with the life assured.
The company owns the policy and is the beneficiary of any claim. This is different to Relevant Life Insurance where the business will be the owner but not the beneficiary. You can read more about Relevant Life Insurance here.
You can change the owner of the policy through a “deed of ownership”. These are not provided by the providers and would have to be written up through a solicitor. You may need to change the owner of the policy if your company ceases trading, or you leave and want to transfer the policy to a personal cover.
When a policy is issued at standard rates, the price remains the same as the quote. A loaded premium is when the underwriter sees fit to increase the premium due to possible health issues or something else that has come to light since the original application.
A critical illness exclusion is something that can be added to the terms once offered. For example, someone may be excluded for cancer if they have previously had cancer. Policies are sometimes postponed if the underwriter wants to wait for further evidence. Or for cool-off periods since a previous health issue. In some cases, policies may be declined.
Yes, medical are quite often carried out at home. It all depends on where you live. In some areas of the country. A nurse can visit the applicant at their workplace or their home, whichever is most convenient. In other areas of the country, it’ll be necessary to visit a surgery.
Running through an application is the next step once you decide to go ahead. This entails mainly questions relating to your medical history. An application can be filled out online but is normally carried out over the phone with an advisor. The application is then submitted to underwriting who will advise on the next step. A policy can be accepted online for someone in good health. You can only start the policy once you have terms and of course only if you are happy with them.
Unfortunately, this is not always the case. There are automatic requests for further information for older age groups and higher sums assured. This can be in the form of a mini-screening or a request for medical information from the GP. Medicals can be carried out pretty quickly and back to the provider within a week. GP reports normally take longer and can take up to 3 months.
There are often more in-depth financial requests with high sum assured cases. This is normally a few extra questions relating to the last 3 years company profits and possibly income details of the life assured.
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