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Key Man Insurance can be described as an insurance policy that is taken out by a business to compensate the business from monetary losses that would result from the death or incapacity of an important member of the business. Most companies have a ‘key person’ who is responsible for most of the profits or someone who has a skill that would be hard to replace. An example would be directors, sales directors, IT specialists, managing directors.

When deciding on the sum to be insured it is worth considering potential loss of profits, the cost of replacement and any costs that would need covering without the key person.

The loss to the business could be loss of company reputation, the decline in sales from the loss of a sales manager, the cost of hiring and training a replacement.

Although it is written on the life of a key business person it is owned by the business. The policy is paid out directly to the business and therefore the premium is paid for by the business.

For more information on Key Man Insurance, please contact us.