When a key person in a business dies or becomes seriously ill it can have a devastating financial effect. This insurance can offer invaluable financial support.
As advisers, we are increasingly working with CLA Members to consider ways that they can look after not only their employees’ healthcare and wellbeing needs but also safeguard their business if a key employee should die or be diagnosed with a serious illness.
This is where Key Person Insurance can offer invaluable financial support.Get a Quote
Key Person Insurance, sometimes known as keyman insurance, is a type of life insurance that protects your business from the financial fallout caused by the unexpected death or serious illness (when Critical Illness Protection is included in the policy) of an indispensable employee.
Usually, business owners choose to cover those with particular skills, expertise or responsibilities. If you are the owner, founder or managing director, you’re likely to be a key person
The proceeds from the policy are paid directly to the company, helping you to protect your profits or clear business debt to continue trading as normally as possible.
When you’re deciding who to cover, it’s useful to ask yourself “what would happen if…?”. You should consider whether you have any key employees that your business simply could not function without.
If you do have employees whose loss would cause severe disruption, or even closure, then Key Person Insurance is likely to be as essential as they are. It’s an especially important consideration for small to medium sized businesses that often rely on a small and loyal team.
In the event of a key person’s death or serious illness (when Critical illness cover is included), your business is the beneficiary, rather than your employee’s relatives. It is designed to provide funding for you to find a successor, or if it is unfeasible for your business to continue operating, provide the necessary funding for an orderly wind down.
The amount of cover is based on the key person’s earnings or their contribution to your profits. It is expressed as a multiple, typically starting at £250k and exceeding £10m in certain circumstances.
The insurance premium will also depend on the employee’s age – it will be higher for a person aged 60 than it would be for a person aged 40.
Benefits for your business
Benefits for your employees
You may wish to consider adding Critical Illness cover to your Key Person Insurance. This means that your business benefits from the same cover provided in the event of a key person’s death should they be diagnosed with a serious illness.
This is because, when a key person becomes critically ill, the hole left in the business is often the same as if they had died. The insurance is designed to fill that hole and prevent tragic circumstances from causing bankruptcy or other financial hardship.
As with Life Only Key Person Insurance, your business is the beneficiary and not the employee’s family.
Providing your employees quick access to healthcare when it’s needed most.
Our wellbeing solutions mean you can look after your team properly - physically, emotionally and financially making for a happier and healthier team.
Providing your employees financial security if they can’t work for a long time due to illness or injury.
Widely known as ‘Death in Service’ benefit. Thankfully, for the vast majority of your employees, the overwhelming benefit is simply peace of mind.
Designed to reduce your employees’ out-of-pocket everyday health expenses.
Providing invaluable financial support when a key person in a business dies or becomes seriously ill.
This is an integral part of today’s benefits packages, helping your employees to prepare for their financial future.
With Bupa, we now offer SMEs a dental plan that will not only match or improve upon benefits offered by any alternative provider but will do so at a more competitive premium.