What is the best Key Person Insurance for me and my business?
This article was last updated:
This article was last updated:
Losing a co-founder, partner, or CEO can have serious consequences for a business's financial sustainability. Key Person Insurance is a type of life insurance designed to help mitigate that risk.
A key person can be any individual who is vital to the running of a business. This could be a founder, director, partner, or key employee.
You can claim on a key person insurance policy when a key person dies, becomes terminally ill, or is critically ill and unable to work. The business will receive a lump sum payment, which can be used to:
Read more about what key person insurance covers
Covering for the loss of a key person can be very expensive. Key person insurance can help to reduce the financial impact of losing a crucial member of the team.
The cost of key person insurance depends on the age and health of the key person, as well as the amount of cover. It can be as little as £6 per employee per month, but can be significantly more.
There is no one-size-fits-all answer to this question. The best Key Person Insurance for you will depend on your business's specific needs and circumstances.
If you are a small business owner, you may want to consider Key Person Insurance if you or someone else is critical to the success of your business. In a partnership, it can provide peace of mind to know that losing a partner won't mean losing the business.
If the business is a startup that is heavily dependent on the skills of a founding CEO or CTO, investors will often make buying Key Person insurance a condition of their investment. You may want to consult with an insurance agent or broker to determine what kind og Key Person insurance is right for your business.
In some cases, buy-sell agreements are an alternative way of ensuring business continuity if the worst-case scenarios.
Life insurance isn't usually an alternative to Key Person Insurance, because it benefits the employee's family, rather than the business.
Life insurance can be a tax deductible business expense in certain cases. For example, if the life insurance policy is taken out on a key employee, the premiums can be deducted as a business expense. Additionally, if the life insurance policy is used as collateral for a business loan, the
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