Key Man Insurance Policy

What is a Key Man Insurance Policy?

Key Man Insurance helps safeguard a business against the financial effects of a critical illness, a terminal illness or from the death of one of the businesses key people. A ‘Key Man’ is an employee whose death or continued absence would affect the profits and the running of the business.

Who is a Key Man?

Key people are individuals whose skills, knowledge, experience or leadership are important to a business continued financial success. Examples of a key individual include, but are not limited to: sales directors, IT specialist, managing directors and heads of product development.

Frequently Asked Key Man Insurance Questions

Who can take out a Keyman policy?

A Keyman Policy can be taken out by a ltd company, or by sole traders as a “life of another” policy, however in this case the person taking out the insurance must have a financial association with the life being insured.

Is the Key Man Insurance policy owned by the business?

Yes. The policy is taken out by the business to cover the life of an employee and so is owned by the business. The business is the beneficiary of any claim which is made, however the payout amount can be used for any reason. This can include payment of staff or covering any profits which may be lost.

Can you change who owns the policy?

Yes, you can change who owns the insurance policy through a “deed of ownership”, however these must be written through a solicitor. You may need to change the owner of the policy if your company ceases trading or if it changes name. There is also the option of transfer the policy to a personal cover although this happen very rarely.

Can a Limited Liability Partnership have a Key Person Insurance policy?

Yes, limited liability partnerships and limited companies are both able to take out Keyman insurance, they both handled in the same way.

Can critical illness cover be added to a Key Man Insurance policy?

Yes, critical illness can be added to any Key Man Insurance policy. Any premium on a successful claim and will be paid to the company, and the company will be the owner of the policy.