What is Key Person Protection?
Key Person insurance, is a policy designed to pay out an agreed cash sum if a key employee suddenly stops work due to death or a critical illness. The payout might represent the loss of business income as a result of the loss of the employee, or perhaps the cost of recruiting and training a replacement. It might also represent the cost of providing sick pay to the Key Person, in the event of a Critical Illness. If the policy pays out the proceeds go directly to the company and not to the individual.
Who is a Key Person?
A Key Person is anyone who plays a key role in the company and especially those directly related to profit generation, such as key sales, design or marketing personnel - in fact anyone central to revenue generation for the Company.
Who pays the premiums and are they tax-deductible?
The Company pays the premiums, which may treated as a business expense. However, if treated as a business expense, it is likely that any claim proceeds would be treated as business income and therefore be potentially taxable.
How are premiums calculated?
The premiums will normally depend on a few factors:
Do we need Key Person Cover?
Ask yourself; if one of your revenue generators dies or suffers a critical illness, how much will this affect profits? Will they remain sufficient to pay fixed costs. What will be the cost and time involved in recruiting a replacement?
Contact us for a quotation for Key Person Cover