Key Person Insurance Protect Your Business If A Key Person Is Lost
Key person insurance can pay your business a lump sum if someone crucial to it dies, is diagnosed with a terminal illness or, if chosen, a specified critical illness.
WHY KEY PERSON COVER MATTERS
Some People Are Hard to Replace
Losing a director or key employee can affect your profits, contacts and confidence in your business. Key person insurance can help, subject to the policy terms.
Cover Lost Profits
A payout could help make up for profits lost while your business adjusts.
Recruit a Replacement
Use the money to help recruit and train someone to fill the role.
Repay Business Loans
Help repay outstanding loans if a key person is no longer there.
Keep Confidence
Help reassure customers and suppliers through a difficult period.
UNDERSTANDING COVER
Know What Your Policy Is Designed To Do
Key person policies differ, so it's important to understand how yours works.
Who Is a Key Person?
Anyone crucial to the day-to-day running of your company, such as a director, an employee, or anyone whose skill, knowledge and experience affects revenue.
Owned by the Business
The policy is owned and paid for by the employer, so any payout is made to the business.
What Triggers a Payout
Death or terminal illness during the policy term, and a specified critical illness if you choose that cover at the start.
Key Person Income Protection
Some insurers also offer cover that pays the business a monthly benefit if a key employee can't work because of illness or injury.
How Much Cover?
A common approach is a multiple of the key person's earnings, often up to 10 times for death, or a share of the profits they bring in.
Tax Treatment
If certain conditions are met, the business can usually deduct the premiums, but any payout is then taxed as income of the business.
YOUR CHOICES
Your Cover Is Shaped By The Choices You Make
These choices affect how key person cover works for your business, including how it's taxed.
Who to Cover
Choose the people whose loss would most affect your profits or day-to-day running.
Amount of Cover
Base it on the key person's earnings, their contribution to profits, or a loan that would need repaying.
Policy Term
For tax relief, the policy should usually be short term, not running beyond the key person's usefulness to the business.
Critical Illness Option
Specified critical illness cover can be added, but it needs to be chosen when the policy starts.
Purpose of Cover
Cover for lost profits can qualify for tax relief, while cover to repay a loan usually won't.
Shareholding
If the key person owns part of the company, the tax treatment can be more complicated, so take advice.
How It Works
Simple Advice. Complete Protection.
Our advisers guide you through every step to ensure you receive suitable cover.
Free Consultation
A no-obligation call with your dedicated specialist adviser to understand your situation and goals.
Understand Your Needs
We take the time to evaluate your unique lifestyle, long-term goals, and budget.
Compare Options
We compare suitable options from the insurers we work with and explain the differences.
Choose Your Cover
Select the exact policy level you feel confident with, guided by clear advice.
You're Protected
Once you're happy, we help you put your cover in place, and we're here if your needs change.
WHY CLIENTS TRUST US
Protection Designed Around Your Lifestyle
Helping individuals, families and businesses protect what matters most.
Financial Security
Safeguard your hard-earned assets against unexpected life events.
Family Protection
Help your loved ones cope financially if the worst happens.
Income Replacement
Keep money coming in if illness or injury prevents you from working.
Property Security
Shield your home and personal valuables from unexpected damage or loss.
Business Continuity
Protect your company's revenue, key employees, and future operations.
Peace Of Mind
Your adviser can help you understand your options at every step.
Clear Advice
We explain what each policy covers, and what it doesn't, before you decide.
Regular Reviews
Your needs change over time, so it's worth reviewing your cover after big life events.
Not Sure Which Mortgage Is Right For You?
Our AI mortgage assistant analyses your situation and matches you with the right product and lender — before you speak to an adviser.
Talk To AI AssistantContact us
Talk to our Mortgage Experts
Have a question about rates, pre-approval, or the buying process? We're here to make the mortgage side of things simple and stress-free. Drop us a line today.
Get Your Free Mortgage Consultation
Speak to a specialist mortgage adviser today
FAQ
Common Questions
Everything you need to know about key person insurance
What is key person insurance? 
It's cover a business takes out on someone crucial to it, such as a director or key employee. It can pay the business a lump sum if that person dies or is diagnosed with a terminal illness during the policy term, or a specified critical illness if that cover is chosen.
Who receives the payout?
The business. The policy is owned and paid for by the employer, so any payout is made to the employer, not the key person.
How much cover does my business need?
Common approaches include a multiple of the key person's earnings, often up to 10 times for death and less for critical illness; a multiple of the profits they bring in, usually based on an average of the last two years; or the amount of a loan that would need repaying.
Are the premiums tax-deductible?
They can be. HMRC says premiums are deductible if the sole purpose is to meet a loss of trading income from losing the key person, and the policy is term insurance with no other benefits. Any payout is then taxed as income of the business. Whole life, endowment or policies with an investment element don't qualify.
Can I cover a key person's absence through illness?
Yes. Some insurers offer key person income protection, which can pay the business a monthly benefit if a key employee can't work because of illness or injury, for example to help hire a temporary replacement.