Key man insurance is a policy companies can take out to cover themselves against the financial losses that can occur when you lose a key worker within the company. This can be through death, critical illness or incapacity. Many companies will overlook this type of business protection or don’t even know there is such a thing. Obviously insurance is something that all companies have to take out for various equipment and machinery. Companies also normally take out some kind of indemnity insurance to cover any mistakes or injuries that can occur within the office. But far too many companies within the UK forget or do not think to take out a key man insurance policy.
Key man insurance will cover the loss of a key person through death or critical illness as long as its covered within the policy details. Of course death is something that is covered through all policies but check the details on suicide. The critical illness definitions vary depending on the provider so make sure you look through the key facts document or policy summary for details.
Pru-Protect offer an insurance through their business disability protection policy. This policy is designed to target business looking to cover a key person for illness or injury through disability. The definitions work slightly different on this policy so you will need to check the key facts. Disability cover is often mistaken for the total and permanent disability definition found within most critical illness policies.
Key man insurance policies work much like straight forward life insurance and critical illness. The underwriting process on the life assured is the same. To get a quote you will need to give the life assured sex, date of birth and smoker status along with the amount of cover and term. This will then allow the broker to produce quotes. The main difference between a key man protection and a normal term life or critical illness is that the owner of the policy is the limited company. The company pays the premiums and will be the beneficiary in the event that the life assured dies or becomes critically ill. Of course with the critical illness they will need to meet the specified definitions in order for a claim but this is something we will discuss in another blog post. Once a successful claim is made the company will receive the lump sum and can then use this money as is needed.
You can find more information on our new FAQ page.
We use a range of insurance providers and their products could be more suitable for your company. These articles are for information only and does not constitute as financial advice in any way