Key Person Protection (Profit Protection)
When a key person in a business dies it can have a devastating financial effect. You can help safeguard your business against the death, terminal or critical illness of a key person with key person protection.
Key person insurance, also formerly called key man insurance, is an important form of business insurance. There is no legal definition for “key person insurance”.
It can be described as an insurance policy taken out by a small or medium sized business to protect that business from potential financial losses that could arise from the death or extended incapacity of the member of the business specified on the policy.
How does it work?
Key Person Protection is a life assurance or life assurance and critical illness cover policy 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.
Why consider Key Person Protection?
The loss of a key person in your business could have a severe impact. The business could suffer badly, with sales and profits falling and increased workloads for the remaining staff.
Key Person Protection is designed to pay out a lump sum on the death of the insured key person, during the length of the policy. It is paid as a lump sum and could significantly help the business to recover. The proceeds can be used to help replace lost profit or finding and hiring a replacement.