According to statistics, only 28% of UK business’s 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
Typical key people will be:
The two most common questions we are asked regarding key man insurance tax treatment are:
Great service and easy to understand. Would use again.
Jody Pearmain of Keyman was very helpful in explaining options and I thoroughly recommend his company
A very good service thanks...
Great prices and good advice, what more could you want.
Everything was made very easy. It was great Jody.
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The services received was great. Many thanks to these professionals at mymainsurance. I will definitely use them again.
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.
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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Over and above what we expected. Thanks!
Our dedicated team are here to offer you expert FCA qualified advice along with 1st class support to make sure the process is fast and simple.
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.
The cost is dependant on the life assured age, smoker status amount of cover and term. 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.
When a policy is issued at standard rates and the price remains the same as the quote (subject to when its started). A loaded premium is when the underwriter see’s fit to increase the premium due to possible health issues or something else that has come to light since the original application. An exclusion is normally related to a critical illness exclusion of one or more of the definitions. 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. Policies can be declined for a number of reasons but its mainly down to someone being too high of a risk due to bad health.
Once you have decided to go ahead the next step will be running through an application which entails mainly questions relating to your medical history. This is something we normally carry out over the phone and takes no more than 15 minutes. The application is then submit to online underwriting which will tell us the next step in the process. For someone in good health, below a certain age and below a certain sum assured it can be accepted straight away with terms offered automatically online. If you are happy with the terms, we can start the policy and you can be covered instantly. Unfortunately this is not always the case, and for certain age groups and certain higher sums assured there are automatic requests for further information. This can be in the form of a mini screening or full medical and a GP report request. Medicals can be carried out pretty quick and back to the provider within a week or so depending on your availability. GP reports normally take longer and can take up to 3 months. With high sum assured cases there are often further financial requests which are normally just a few extra questions relating to the last 3 year company profits. There is an option to take out instant cover while underwriting is taking place, but this would need to be requested and is not always available. But even in the worse case scenario we have been known to have policies up and running within a few weeks. A client who is freely available for a medical and willing to help chase a GP for the medical report is always a plus!
The owner of the policy has to be a UK company although the lives assured do not have to reside in the UK.
Yes LLP’s are treated the same as limited companies when it comes to key man insurance.
It really depends on the reason for the insurance. If its to cover a loan or investment they you would normally cover them for that amount. If its straight forward key person insurance then you would need to work out how much that person is worth to company. Think about loss of profits, cost of replacement and debts that would need to be covered and contingency to keep the company running without that person. Use our calculator to help work out the cover amount.
In most cases yes they are, but it really comes down to what the insurance is being used to cover. For example it may be the case that the premiums are not deductible if the insurance is to cover a business loan. The guidelines on deducting the premiums where originally set our by Sir John Anderson in 1944 who was the then UK chancellor. As normal with these things its always best to speak to a qualified tax adviser or directly to HMRC as these things can be down to interpretation. However we do go into a lot more detail on one of our blogs here.
Keyman insurance is underwritten very much the same as a normal life insurance product with Guaranteed and Reviewable rates. It really depends on how long you think you will need the policy. If you belive the person you are insuring will be at your company for 10 years then you should take out a 10 year premium guaranteed or reviewable premium. Taking out a shorter premium may mean having to renew it which will normally mean more expense especially if that person has suffered any illnesses. Taking out a longer term premium will guarantee the rates (if you take out guaranteed rates) and means yoo do not have to renew the policy. You can cancel these policies at anytime without penalty so there is no risk of taking of being stuck with a policy if that person leaves the company. Shorter premiums are normally cheaper as the underwriter does not have to calculate the person being that bit older but as mentioned it will be more expensive if you then have to renew the policy.
Yes we can arrange a policy to pay out monthly amounts. You may even be more suited to a key man income protection policy.
Yes critical illness can be added to any key person policy and will be paid to the company in the event of a successful claim.
This depends on age, health and sum assured. Policies over £500,000 normally always require a medical no matter what provider is used.
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, visits at home or the workplace are not possible, and it’ll be necessary to visit a surgery.
Keyman insurance is normally taken out by a ltd company. However it can be taken out by sole traders as a “life of another” policy. The company or person taking out the insurance must have a financial association with the life assured.
Essentially its about keeping the company running and financially stable in the event of a key persons absence due to illness or even worse, death. One of the top reasons for companies going bankrupt (especially small business's) is due to the loss of a major player within the company. Having a lump sum of money paid to the company in the event of a claim can help hugely to saving the business until a replacement is found or if the person comes back to work.
The policy is taken out by the company to cover an employee so the company owns the policy and is the beneficiary of any claim
In the event that a policy is being set up to cover a loan (loan protection) or for an investment, it is often the case that they may stipulate a key man policy to be assigned. This will mean that in the event of a claim the money will be paid directly to the assignee's. If this is the case a bank should be able to provide you with the assignment documentation. The company or employer will still be the legal owner of the policy.