How it works.

Who is a Key Person?
A key person is an individual whose skill, knowledge, experience or leadership contributes to the financial success of a business. A key person could be one of a number of people within the business, such as the:

  • Chairman
  • Managing director
  • Marketing manager
  • Computer specialist
  • Sales manager

Anyone whose death could lead to financial loss for the business through:

  • Loss of profits
  • Having to recruit or train a replacement
  • Important business contracts being lost if the key person is not there to maintain relationships
  • Customers and suppliers losing confidence in the business

How do we prove an employee is a Key Person?
For a business to insure one of its employees it must be able to demonstrate that it will suffer a financial loss as a result of death, terminal illness or critical illness (if chosen) of that employee. Most small and medium sized businesses will have one or more employees who are crucial to their continued success.

Who pays the premiums?

  • As the business is the owner of the policy, it would pay the premiums

What type of policies are available?
You can choose either a life cover policy or a life and critical illness cover policy.

Your decision depends on what circumstances are involved and the events the business want to insure the key person against.

The effect of being diagnosed with a critical illness can have the same devastating effects on the business as the death of a key person. 

For information on the taxation effects, Trusts and Inheritance Tax please read the Technical Guide PDF before you apply for a plan.

What happens if a Key Person leaves or retires?
If a key person were to leave or retire before the end of the policy the business could do one of the following:

  • Stop paying the premiums and the policy would end
  • Continue paying the premiums until the end of the term and in the event of a claim the business could receive a lump sum
  • Assign the policy to the key person who would then become the legal owner of the policy and could continue paying the premiums.

Traditional English Partnerships and sole traders have different options if the key person leaves or retires.

Call us on
0800 197 9208


9am to 5pm Monday to Friday
We may record and monitor calls.

Or email us at