Key Person Insurance

If an important member of staff dies unexpectedly, or is unable to work because of a serious illness it can have a major financial impact on a business. Small and medium size businesses are particularly at risk, but this risk can be mitigated by taking out appropriate insurance.

There are various types of insurance policies. A term assurance policy, which pays out if an employee dies during a given period (up to 5 years is typical), is the most popular. In addition, it is wise to consider critical illness cover, so that a claim can be made if an employee is unable to work through serious illness such as cancer, heart attack or stoke.

All types of businesses can take out key person insurance. For companies or sole traders this may be on the life of a key employee or director. Partnerships can take out insurance on a key partner and hold the policy jointly, or the key partner holds the policy in trust for the other partners.

Generally, the cost of key person insurance will be allowed as a business expense for corporation tax purposes. The proceeds in the event of a claim would be treated as a trading expense.

If you have no cover in place, or wish to review the key person insurances already made, contact us for quotations without obligation.