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KEY MAN INSURANCE
- Jody
- November 30, 2022
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Vitality Key Man Insurance Review 2023
As a business owner, you are likely aware of the many events that could derail your business – from unforeseen drops in consumer demands to the loss of a crucial employee.
While these events are not always possible to predict, there are certain steps you can take to minimise damages. This could include Vitality Business Protection, which supports businesses as they navigate the loss of a crucial employee.
What is Vitality Key Man Insurance?
Vitaly Key Man Insurance policies, also known as Key Person Insurance, are designed to protect businesses by minimising the impact caused by the loss of a vital (or rather, key) employee.
For example, it’s designed to help cover the loss of an employee whose efforts or position were crucial to the success of the business – meaning their role cannot be filled through a typical recruitment process. This means that the loss of this employee puts the business (and its economic success) under threat.
While various roles can be protected under Key Man Insurance, it could include positions such as:
- Company Founders.
- Office Managers
- Engineers
- Web Developers
- Top sellers/sale generators
Of course, the decision as to which roles are deemed ‘crucial’ is up to the discretion of the business manager or owner, as only you can recognize the value of each employee.
The true benefit of these policies is made clear when you look further into the consequences of these losses, especially when you focus on the more senior roles within your company. For example, a recent study from Warwick University found that “the death of a founding entrepreneur wipes out on average 60% of a firm’s sales and cuts jobs by around 17%.” This dramatic decrease in funds could cause employees to close prematurely, resulting in mounting debt and economic uncertainty. A policy such as Key Man Insurance provides a sense of cover and stability. This means businesses can quickly recuperate from the loss of even the most vital members of their team.
Vitaly Key Person Insurance policies can pay out if the employee:
- s diagnosed with a critical or terminal condition, rendering them unable to work. This could include a range of diseases, such as cancer, or conditions that impact an individual’s ability to work to their previous capacity, such as blindness or loss of mobility. Passes away, either unexpectedly or due to a long-standing illness. This includes accidental death.
- Premium policies also offer support during long-term sickness and disabilities that either temporarily or permanently reduce the amount of work that the employee can carry out.
- While some insurance policies cover the company as a whole, key man insurance must be taken out against each employee. This may mean that you need to take out several policies at once, depending on how many members of your workforce you consider to be ‘critical’ to your success.
How Long Does Vitality Key Man Insurance Last?
When taking out Vitaly Key Man Insurance, you’ll be given the option of selecting a fixed or renewable term policy. Most policies last between 5-10 years.
Fixed Term Policy.
A Fixed Term policy runs for a pre-agreed or premeditated amount of time. Once this policy has expired, you can apply again should the employee remain within your company. Most policies last between 5-10 years, depending upon how long you believe the employee will remain at the company.
Renewable Policy.
A Renewable Policy functions similarly to a fixed-term policy, only it is a little easier to renew. This means you can renew the policy without having to file a new application.
What are the Different Kinds Of Vitality Key Man Insurance?
There are typically three kinds of cover within a Vitality Key Man Insurance Policy:
- Level Cover
- Decreasing Cover
- Indexed Cover
Level Cover.
The amount of money you’ll receive stays the same, regardless of when the claim is made (or the person passes away).
Decreasing Cover.
Indexed Cover.
What are the Benefits Of Vitality Key Man Insurance?
Of course, no insurance policy can make it easier to process the grief associated with losing a colleague. However, the right policy can limit stress and anxiety during this time by allowing the business to run smoothly without financial worry.
There are many benefits associated with taking out Vitality Key Man Insurance. For example, they can:
- Cover the coscruitment and training processes. For example, emplt of hiring a replacement for the lost employee, taking into account lengthy reoyers spend, on average £1,530 per employee each year though this figure may be higher when training staff for more complex or senior roles.
- Cover the loss of profits associated with this loss. The amount of money you will receive depends on the employee, their salary and their contributions to your business as a whole.
- Provide you with greater peace of mind, especially when it comes to the long-term success of your business. This gives employers and team members a chance to properly grieve and process the loss of a close friend and employee, without worrying too much about the business side of things.
Vitality also provides its policyholders with access to a benefits/rewards program. Each time a policy is taken out, you’ll receive a certain number of points that can be used against a range of purchases. You can also gain more points when you make positive lifestyle changes, or connect your account to your FitBit or similar device.
Does Vitality Offer Any Policy Enhancements?
Vitality also offers enhancements to its policies which can increase the amount of financial support you receive following the untimely loss of an employee.
Disability Cover.
Vitality’s disability cover is designed to protect both business and employees should an employee receive a disability diagnosis that significantly impacts their life or ability to work. This serves a dual purpose. Firstly, it benefits the employee greatly during what is likely an emotionally and economically turbulent time. After all, a recent study from SCOPE found that “Life costs you £583 more on average a month if you’re disabled.” This policy can also help you make any necessary changes to your business that will allow the employee to return to work as soon as possible. This reduces the impact on both the employee and your company, while also creating a more inclusive workplace.
Business Serious Illness Cover.
This policy is designed to protect an employee should they suffer a serious illness whilst under your employment. It was developed to protect your business from the losses associated with their prolonged or unexpected absence. Their basic serious illness policy offers cover for 138 illnesses. This is split into categories depending on their severity (ranked A – E). Should an employee be diagnosed with a disease ranked A, such as Advanced non-Hodgkin’s lymphoma results in a 100% payout, while a less severe or critical condition will be paired out with a lower payout?
Vitality also offers Business Serious Illness Cover Plus, wherein 167 conditions are covered from Severity A (100% payout) to Severity G (5% payout). This program also offers a Cancer Relapse Benefit, which provides “protection against cancer recurrence by paying out an additional 50% for subsequent cancers.”
How Much Cover Do I Need?
Determining the level of coverage you need when it comes to Key Man Insurance can be difficult. This is because it varies from employee to employee. It can depend on the amount of value (or income) they bring to your company, alongside the costs you’ll incur following their passing. For example, this could include costs such as recruitment and training.
Many policy providers advise that you cover up to ten times the annual salary of the key individual. This can prove beneficial as it provides you with long-term financial support, given that it’s likely to take you some time to recuperate from this loss.
However, it’s important to note that these figures can vary widely from one policy to another – and is largely down to your discretion. Think about how far-ranging this loss could be, and the steps you’d need to take to recover. This should help you figure out the ‘cost’ of the loss to the best of your ability.
What factors can increase the cost of Key Man Insurance?
Various circumstances could increase the cost of your keyman insurance policy. These are often dependent upon the individual or work in question. For example, premiums may be higher when:
- The employee is older or nearing retirement, as they are considered more likely to develop serious or critical illnesses. For example, “the prevalence of chronic diseases increases with age. Among people aged 80 and over, 56% of women and 47% of men report multiple chronic diseases on average across EU countries”
- The employee is a long-term smoker, given that “smokers are more likely than nonsmokers to develop heart disease, stroke, and lung cancer” amongst other complications.
- The general health of the employee, including any pre-existing health conditions or ailments they are facing.
- The employee’s work or hobbies outside of work may be considered hazardous, or increase their risk of getting injured. For example, pursuits such as rock climbing or kayaking.
- The length of the policy you take (5 years, 10 years, etc.)
Vitality Key Man Insurance Review.
Taking out an insurance policy often requires extensive research to ensure your investment is worthwhile. Fortunately, Vitality Key Man Insurance receives consistently positive reviews from policyholders. For example, 67% of the TrustPilot reviews give Vitality 5/5F Stars.
Vitality also offers its policies for a surprisingly competitive price. While there are cheaper policies out there, they are often less comprehensive and less beneficial overall. As a result, vitality insurance is a better investment based on reviews and customer feedback or experiences.
Does Vitality Key Man Insurance Offer Benefits For The Employee?
The beneficiary of a Key Man Insurance Policy is the business or business owner, not the individual employee. This means that the benefits are solely business-orientated, designed to cover business-related losses and expenses. As such, business owners or employees may want to consider additional policies that incorporate employee benefits and coverage.
Where can I get Vitality Key Man Insurance?
At My Key Man Insurance, we are the longest-serving business protection
specialist in the UK. We’re well-versed in providing our customers with access to the best protection policies around, and that includes vitality.
Get in touch today to find out more, or fill out our simple online form to compare key person insurance quotes. We look forward to hearing from you!
You can also check out more information on other UK insurance providers here.
Jody is the Managing Director and founder of My Key Finance Ltd. He has over 22 years of experience as a mortgage & protection adviser. He is an authority within the UK business protection market & specialises in key man insurance, relevant life cover and shareholder protection. Jody has written articles for Business Matters, Business Directory and has been featured in Forbes. He is Authorised & Regulated by the Financial Conduct Authority and is CeMAP qualified.
As editor and author of our blog, Jody hopes to educate and advise people with more in-depth information & guidance on life insurance and business protection.
Jody & his wife Lori featured in the BBC programme “The House £100k Built” He is also a keen Arsenal fan and loves nothing more than watching his son & nephews play football at the weekend.
