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.

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.

• Life Only Key Man Insurance

A life only policy is much like a straight forward term life insurance. A person is insured for a sum of money is which is paid out on death. The only variation from different providers will be whether terminal illness is also included which it normally is. Life Only can be taken out with a level term or decreasing sum assured.

• Life & Critical Illness

Critical illness can be bolted on to the life insurance or taken out on its own (Not very often) 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 from the ABI. Speak to one of our advisers for more specific information on providers and their definitions.

• Key Man Income Protection

Key man income protection is another option which can sometimes be more suitable. Much like a personal income protection policy, key man income protection will pay out a monthly income to the company in the event that the life assured is unable to work 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. The underwriting is quite strict and there are only a few companies that offer cover. You will need to have more than 2 employee’s and the life assured can not be liable for more than 70% of company profits.

• Whole of market brokers

Being a whole of market broker allows us unrestricted access to quote from all the UK providers.  These include companies such as Legal and General, Zurich, AIG and Aviva to name a few. By keeping whole of market access we are able to compare the widest range of options for our clients meaning they get the best options and the cheapest price.

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.

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 can be added to any key person policy and 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.

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.

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.

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.