Key person insurance

Key Person

Protect your business against the impact of critical illness,
terminal illness or death of your most integral employees.

Introducing key person insurance

At the heart of every successful business are talented, dedicated and capable people, but none of us know what the future will bring. Our research found that 59% of businesses believe they would have to stop trading in less than a year after the death or critical illness of a key individual.

A key person insurance policy, such as our Key Person Protection, helps safeguard a company against the financial impact of death, terminal illness (if the life expectancy is less than 12 months), or a specified critical illness (if chosen for an extra cost at the outset) of a key person.

Policy proceeds are paid directly to the business to help replace the key person and help cover any profit loss. The policy proceeds could help your business to continue trading.

What is ‘key man insurance?’

‘Key man insurance’ means the same thing as key person insurance, and refers to insurance policies that protect businesses from the loss of a key individual – men and women – who are unable to work due to a critical or terminal illness, or have passed away during the length of a policy.

Put simply, ‘key man insurance’ is where a business insures itself against the financial loss it would suffer in this eventuality. It's about giving your stakeholders the confidence that your business can survive and thrive even in the event of losing a key person through death or a specified critical illness.

Customer Contact

To discuss our Business Protection Plans, call us on 0800 197 9208.

Lines open 9am to 5pm Monday to Friday.

We may record and monitor calls.

Alternatively, email us on

Looking for the adviser centre?

If you are an adviser looking for support for your clients, our adviser and wealth management centre can provide all the information you need.

Who is a key person?

A key person could be anyone who is crucial to the day-to-day running of your company, such as a director, employee, or anyone whose skill, knowledge and experience affects revenue. Or, to put it another way, what responsibilities might a key person have?

Consider if any loans or financial commitments depend on that person, whether their loss would have an impact on sales, or whether their absence would impact on future planning, for example.

Key person protection
Key person protection

Who can take out key person insurance?

If you own a business - for example, if you're a limited company director - you can take out key person insurance with the agreement of the person who is being covered. You will need to have a financial relationship with that person.

Key person protection policy

When should you take out key person insurance?

If your business is growing, there is no right or wrong time to take out a key man or woman life insurance policy. A start-up company may be dependent on one or two individuals who are fundamental to the business’s success, whereas a larger company may have greater resources and the ability to substitute key staff with other personnel.

However, established companies have larger overheads, so if the loss of one individual affects revenue, the consequences for the business could be serious. Every business is different, but key employee insurance can provide a safety net for your business.

Key person insurance

Why should I consider Key Person Protection?

It’s never nice to contemplate worst case scenarios, but the sad reality is that the loss of a key person in your business could have a severe impact. With a crucial member of the team absent, any business could suffer badly, with sales and profits falling and increased workloads for the remaining staff.

Key Person Protection is one way to safeguard your business against the death, terminal or critical illness of a key person in your organisation. It’s designed to pay out a lump sum on the death of the insured key person during the length of the policy, helping compensate for the loss of their skill, knowledge, experience or leadership.

This money could significantly help the business to recover; for example, the proceeds can be used to help replace lost revenue, or with finding and hiring a replacement.

Who in my company will need key person cover?

Key Person Protection can apply to any individual deemed to be critical to your business, but to help you think of your company's needs, here are some roles that are typically covered by key person insurance:

Owner/founder CEO Operations manager IT manager
Web developer Sales lead Employees with lots of contacts Exceptional talents

Key person insurance explained

How does Key Person Protection work?

Legal & General Key Person Protection is a life insurance policy (with critical illness cover if selected) taken out to cover the life of a key person within your business. The policy is owned and paid for by the employer, so any pay-out is payable to the employer.

If you're taking out Key Person Protection to cover a key man or woman in your company, you can make a claim during the length of the policy in the following circumstances:

  • Death of the individual
  • Terminal illness (included - this is where life expectancy is less than 12 months)
  • A specified critical illness (if Critical Illness Cover is chosen at the outset for an extra cost)

Terms & Conditions apply. You will need to be able to demonstrate that your business would suffer a financial loss of profits in the key person's absence in order to insure them as a key person.

For more information on what Key Person Protection covers, contact us on 0800 197 9208.

What does Key Person Protection help protect?

A payout from the policy after the loss of a key person could help with the following situations:

  • Loss of profits
  • Having to recruit or train a replacement
  • The loss of important personal or business contacts due to the key person not being there to maintain a contract
  • Loss of goodwill which could have a direct impact on raising capital for the business or attracting new investors
  • Customers and suppliers losing confidence in the business
  • Outstanding loans

Speak to a qualified financial adviser

Our team of expert financial advisers are on-hand to offer professional advice and answer any questions you have about Key Person Protection. You can call us on 0800 197 9208 from 9am to 5pm Monday to Friday (note - we may record and monitor calls).

You can also email us at to arrange a call back or book an appointment to speak to us.

Relevant life plan

Relevant Life Insurance

Relevant life insurance is a cost-effective way to provide life insurance to employees. Our guide explains how it works and what the benefits of a Relevant Life Plan are.