About Drewberry Insurance
stars
stars
Drewberry Insurance services are rated 4.9 / 5 based on 137 client reviews
Insurance Providers
971
543
Group Insurance Quote

What is keyman insurance – what does it cover?

+2 votes
I keep hearing people talk about key man insurance but what does it actually cover?
asked by VincentHopper (350 points)

1 Answer

+2 votes
 
Best Answer

Key person insurance is a type of cover designed to protect a business against the risk of ‘key’ staff members either passing away or suffering a critical illness, such as cancer for example.

It is worth considering what the consequences would be if a director or employee with specialist skills died or became seriously ill? This can often have a large impact on a business in terms of lost revenue and staff replacement costs.

How does keyman insurance work?

This type of cover is essentially a specialised life insurance policy with added critical illness cover (optional but usually recommended) taken out buy a business written on the life of a key employee or director.

Thus, if that staff member died or suffered a critical illness condition (which may mean they are no longer able to work) then the policy would payout a lump-sum to the business. The business can use the subsequent funds as they see fit.

What does keyman insurance cover?

The loss of a business partner or top sales person could have a huge impact of future profit and may be very expensive to replace in terms of recruitment costs and training. If a director passed away there may also be issues with raising finance or repaying business loans. The policy is designed to cover such losses.

Is it worth having given the chances of passing away? This would depend of your risk appetite but the chances of dying during your working life are 1 in 7 for men and 1 in 11 for women (1), so the risk is very real and often underestimated. Naturally the risk of a critical illness is far higher.

(1)    Based on ONS data estimates for the years 2008-2010.

This information does not constitute financial or other professional advice. You should consult your professional adviser or contact us directly on 020 8432 7333 should you require financial advice. It is important to ensure any insurance policy you take out is suitable for your needs.
answered by Andrew Jenkinson (4,910 points)
edited by Andrew Jenkinson

Related questions

Unbiased Insurance Advice
verisign seal
Recent Press
1. You Come First
We are a client focused business who always aim to put you first.
2. We are Experts
To provide you with the best advice, we need to know our stuff!
3. We are Human
We are real people with feelings who are here to help you.
4. We are truly Independent
We believe the best advice has to be completely unbiased.
5. We are here to Educate
We are here to educate you so you can make informed decisions.

We would love to hear from you, whether you are enquiring about our services, a career, or a business partnership.

  enquiries@drewberryltd.com
Our Locations
London Office
Corporate Advice
  020 8432 7333
Brighton Office
Personal Advice
  01273 646 484
The Power of Positive Thinking
May 9, 2014
At Drewberry Insurance, we talk to a lot of clients about their health every…

Doctor Warns "Don't Get Sick"
April 8, 2014
A Sky News report released over the weekend has raised further concern over the…

Spain is taken to court for refusing the European Health Insurance Card (EHIC)
July 30, 2013
Within the European Union the European Health Insurance Card (EHIC) allows citizens to access…

Published by Andrew Jenkinson
Financial Services Authority
Powered by Q2A