How Much Is Key Man Insurance?
The cost of key man insurance can vary widely based on several factors. These factors include:
Coverage Amount: The amount of coverage you need will significantly impact the cost. The more coverage you require, the higher the premiums will be.
Key Person’s Age and Health: The age and health of the key person being insured play a role in determining the premium. Younger and healthier individuals typically receive lower premiums.
Occupation and Role: The nature of the key person’s job and their specific role within the company can affect the cost. More critical or high-risk roles may result in higher premiums.
Term Length: The length of the insurance policy’s term matters. Shorter terms are generally less expensive than longer ones.
Insurance Provider: Different insurance companies offer varying rates for key person insurance. It’s essential to compare quotes from multiple providers to find the best value.
Business Size: The size and financial stability of your business can influence the cost. Larger companies may have more negotiating power and access to group insurance rates.
Location: The location of your business may affect the cost of insurance due to regional differences in insurance pricing and regulations.
Underwriting Requirements: Insurance companies may have specific underwriting requirements, such as medical exams or health questionnaires, which can impact the premium.
Industry and Risk Profile: The industry your business operates in and its risk profile can also affect the cost. Some industries are considered riskier than others.
Additional Riders or Coverage: If you choose to add riders or additional coverage options to your key person insurance policy, it will increase the cost.
To get an accurate cost estimate for key person insurance, it’s advisable to reach out to insurance providers for quotes. They will assess your specific needs, including the coverage amount and other relevant factors, to provide you with a customized premium rate. Working with an insurance agent or broker can also be beneficial as they can help you navigate the process and find the best coverage at a competitive price for your business’s unique circumstances.
Below are some examples of a typical premium for £100,000 key man insurance.
These are based on a male life, non smoker over a term of 10 years.
Life Only (which includes terminal illness)
- 30 year old – £5 per month
- 40 year old – £6 per month
- 50 year old – £13 per month
- 60 year old – £32 per month
Life & Critical illness
- 30 year old – £18 per month
- 40 year old – £33 per month
- 50 year old – £79 per month
- 60 year old – £175 per month
As the above shows, adding critical illness cover to a key man life insurance policy typically increases the overall cost of the policy. This is because critical illness cover provides additional protection by paying out a lump sum if the insured person is diagnosed with a severe illness, such as cancer, heart disease, or stroke. These illnesses often require extensive medical treatment, time off work, and lifestyle adjustments, which can lead to substantial financial burdens. As a result, the insurance company assumes a higher level of risk by including critical illness, and this increased risk is reflected in the higher premiums. While the added cost may be a consideration, it provides valuable financial support during a challenging period of illness, offering peace of mind to policyholders and their families. You can check out our blog “what illnesses are covered by critical illness” and see if you think its worth adding.
Before moving forward to getting a key man insurance quote you need to make sure the amount of cover is correct. You can can use our key man insurance calculator to do this. You can also check out our in depth guide to key man insurance here.