Key Man Insurance UK | Insuring Your Business’ Most Valuable Staff

Key Man Insurance UK

Key Man Insurance (Key Person Protection Insurance) is a Life Insurance policy taken out by a business on their most important employees. By insuring your ‘key’ employees your business can ensure it will continue to trade in event of their loss due to death or critical illness. The business will receive a lump sum cash payment, at a time when it may need it most, which can then be used to help protect the profits.

Every business has at least one or two key staff members who are vital to the company’s successful running and make a major contribution to the success and profits of the business. This could, for example, be a Business Owner, Director, Manager, or another employee with specialist skills who are important to the day to day running of your business.

If that key person were to die or be diagnosed with a critical illness, it is highly likely that your business would be severely affected in a number of ways. Suddenly losing the skills, knowledge, leadership or experience contributed by that person could result in an immediate loss of productivity and profits for the business. In addition, the costs incurred whilst having to recruit and train a replacement could be significant.

Key Man Insurance protects businesses from the negative effects of losing such valuable staff members. This could enable a company to continue trading smoothly and effectively in the event of a key person’s death or a critical illness diagnosis.

To find out more about Key Man Insurance and how Spectrum Financial Advice can help, continue reading and also have a look at our frequently asked questions (FAQs) towards the end of the page.

Contact us today for a fee-free, no obligation review to find out how easy it could be to protect and secure your business.

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Free Review

Contact Spectrum FA today for a free, no-obligation review with a specialist Key Man Insurance UK advisor.

Competitive Premiums

With our access to the leading insurance providers, Spectrum FA can source competitive insurance premiums.

Bespoke Service

Spectrum FA provide personalised advice tailored to your particular business requirements.

Considering Key Man Insurance

To determine whether an individual is of such key importance to your business, you should ask yourself these questions:

  • Is this person irreplaceable (i.e. does he/she have unique experience, skills or talents)?
  • Does he/she contribute significantly to your business’ running (i.e. would you be unable to run your company smoothly without this person)?
  • Does he/she contribute significantly to your business’ profitability (i.e. would losing this person immediately result in a loss of productivity and/or profits)?
  • Do your contracts (some or all) solely rely on his/her presence (i.e. would you lose contracts if this person was diagnosed with a serious illness or died)?
  • Would crucial business contacts (suppliers and/or customers) leave if he/she was no longer with you?
  • Are there any outstanding loans and/or other financial obligations (like investors, for instance) your company would be unable to fulfil without him/her?
  • Would your business have difficulty funding recruitment & training of a suitable temporary/permanent replacement if he/she were to become critically ill or die?

If your answer to any of these questions is ‘yes’, you should seriously consider taking out key person insurance to safeguard your business against such a loss.

Expert Key Man Insurance Advice UK

When taking out a key man policy, several factors must be carefully considered, including:

  • The first consideration is, of course, which employees are of key importance to the company and should subsequently be insured (see above for details on how to identify key employees)?
  • Next, it is necessary to determine the correct required level of cover (i.e. the amount needed to adequately protect your business against the loss of a key individual).

If, for example, cover is inadequate, the company may find that the lump sum provided is not enough to cover the expenses/losses incurred due to the loss of a key individual. If, on the other hand, cover is too high, monthly premiums may become unsustainable (this could especially become a problem for smaller companies). Either way, the financial security of the company could be left at risk.

  • Whether critical illness should be added to the policy and, if so, which conditions will be covered. It should be noted here that critical illness is available either as an add-on to key man life insurance policies or as a stand-alone policy.

Conditions covered vary between insurance providers and policies, so comparing policies and reading respective terms & conditions is important.

  • Monthly premiums, which not only depend on the selected cover level but also vary between policies/insurance providers. As mentioned above, keeping these premiums affordable is an important consideration, so again, careful comparison of available policy options is crucial.

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FAQs

View some of our frequently asked questions that some of our customers have asked.

What is a Key Man?

A key man (key woman, key person) is any member of your staff who makes major contributions to your business’ daily running, profitability and success. This could be anyone with years of experience, special knowledge/know-how, leadership or other skills and talents unique to them, including:

  • Owners/Partners
  • Directors
  • Managers
  • Technical Experts
  • Other Employees with Specialist Skills

A key person is an individual whose experience, skills/talents, knowledge and/or leadership are of crucial importance to the smooth running & success of your company – and whose loss in the event of their death or critical illness could have a significant detrimental effect on your business and its ability to continue trading.

How to Identify Key Personnel Within Your Company

If you, like most companies (regardless of size and industry) have key people fundamental to your business’ operation, it is imperative that you consider how your company would cope if one of these individuals were to suddenly develop a critical illness or die.

So – Exactly What is Key Person Insurance?

Often also referred to as key person or key man protection insurance policies, a key man policy is an effective – and necessary – type of insurance policy designed to protect companies in the event of a key staff member’s death and/or critical illness diagnosis.

Providing a lump sum in the event of an insured key person’s critical illness or death, key man protection provides a vital injection of funds that enables the company to cope with the immediate (loss of productivity/profits, recruitment/training expenses) and long-term (loss of contacts/contracts, necessity to repay loans/other financial obligations) consequences of such a loss.

Thereby enabling the company to continue trading without major disruptions and financial difficulties, key man protection is therefore vital to the future financial security of a business.

How Does Key Man Protection Insurance Work?

Taken out by a company in relation to one or more key employees, key person insurance is paid for by the company taking out the policy. Should an insured key employee pass away or be diagnosed with a critical condition (this depends on whether critical illness has been added to the policy), the policy pays out a lump sum. This lump sum can then be used by the company to cover immediate expenses (hiring/training temporary staff/a permanent replacement) and mitigate any financial losses due to loss of productivity, contacts, contracts, and so on.

Why Spectrum FA?

With Key Man Insurance, your business can protect those who are most important to your business. In the event of the death or critical illness of any of the people covered, the business will receive a single lump sum payment, which could be used to pay off any outstanding loans, recruit and train new members of staff, employ temporary replacements in the interim or lessen the financial impact of any drop in trade or the loss of any contracts. Some business contracts may even specify that key person insurance is already in place. This can help protect all parties involved.

Spectrum Financial Advice have helped many businesses protect their key employees with Keyman Insurance. With years of experience and access to the leading insurers in the market, we will recommend suitable policies, based on the individual circumstances of you and the business. We will:

  • Assess your situation/circumstances (free of charge and without any obligation to proceed).
  • Help you determine which employees should be covered, recommend the correct type of policy (i.e. with or without critical illness) and cover level necessary to adequately protect your business, and
  • Recommend the most suitable policy to meet your company’s specific needs

To find out more about Key Man Insurance or how our expert regulated advice could help protect your business against the loss of your most valuable employees, please get in touch with us today to arrange your free, no obligation review. You can contact us by email at info@spectrumfa.co.uk, by phone on 01279 315 013 or by using the contact form on the website.

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