What is a P11D or Benefit in Kind?
Question asked by Laura Grisham
I’m a managing director of my own company. My business is doing well and I want to ensure it can continue to perform well should anything happen to me. Key Man Insurance seems like a good idea, but I’m not sure how much I cover I need. Can you help?
Key Person Insurance protects your business against the risk of a ‘key’ staff member passing away or suffering from a critical illness.
However, you’re correct — it can be hard to know how much to insure your business for. This is especially true if it’s doing well and currently growing.
So just how do you value your business and your contribution to it for Key Man Insurance?
Firstly, it’s important to understand that every business is different. That means there’s no hard and fast rule when it comes to deciding how much cover you need. The level of Keyman Insurance necessary varies from company to company.
However, there are a couple of metrics advisers commonly use to assist them in this area. For example:
The multiple of profits you choose will be different depending on if your company is growing or breaking even.
Moreover, if your Keyman Insurance is for a specific purpose, you might want to consider on top of the above:
Ultimately, it’s hard to say exactly how much Keyman Insurance you need without first speaking to you and discussing the needs of you and your company. As mentioned, every company is different and will require a unique approach.
Insuring yourself for an arbitrary figure generally isn’t helpful. You might be paying for too much or too little cover, which could have consequences should you ever need to claim.
We recommend you seek expert advice, such as that available from the team here at Drewberry. That way, you get cover exactly tailored to your company’s needs. You can reach us on 02074425880.