Keyman Insurance or Executive Income Protection?

What is Keyman Insurance?

Key Person Insurance protects companies against the risk of a key player in the business dying or developing a serious illness / injury

• Life Insurance provides a cash lump sum should a key individual die (or is diagnosed with less than 12 months to live under Terminal Illness Cover)
• Adding Critical Illness Cover to the policy will provide a cash lump sum for business should the key person develop a condition from a set list of serious illnesses / injuries
• The key person could be anyone within the business responsible for profit generation or who otherwise is vitally important to the ongoing financial and commercial success of the company
• Key Man Insurance is typically taken out for two main reasons: business continuity purposes (to ensure the business can continue without the input of a key person) or at the stipulation of an investor or lender who wants to protect their interest in your business.
• For business continuity purposes, the premiums are typically a tax deductible business expense providing they’re taken out on the life on a non-shareholding employee, as these premiums are wholly and exclusively for the benefit of the business. However, the benefit will usually be taxed on a claim, almost like a trading receipt.
• If Keyman Insurance is to protect a loan, premiums are typically not tax deductible as the premium is for the direct benefit of the lender, not the business. However, the benefit is usually received free from tax.

Difference between Keyman Insurance and Income Protection

There are a number of key differences between the two policies which we have detailed below.

If you’re looking to protect your business against losses caused by the death or serious illness of a key individual, you need Keyman Insurance.

If you want to protect your own income in case you can’t work to support yourself and your family, you need to look at Income Protection.

Sam Barr-Worsfold
Independent Protection Expert at Drewberry

Need Help? Get Business Protection Advice

Many of our clients are key to the success of their business, especially individuals who are directors of their own limited company, but this doesn’t necessarily mean Keyman Insurance is right for them.

While Key Person Cover plays an important part in ensuring business continuity or protecting a loan or investment, it doesn’t help an individual who finds themselves unable to work in their company due to accident or sickness.

Why Speak to Us?

We started Drewberry™ because we were tired of being treated like a number.

We know that our clients give so much to their businesses. They therefore deserve first class service when it comes protecting that business and their interest in it. Here are just a few reasons why it makes sense to talk to us:

• There is no fee for our service
• We are award winning 🏆 independent insurance advisers who work with all the leading UK insurers
• You’ll speak to a dedicated expert from start to finish
• We are very proud of the 3749 and growing independent client reviews rating us at 4.92 / 5
• Claims support when you need it most.
• We are authorised and regulated by the Financial Conduct Authority. You can find us on the financial services register here 🧐