How Do I Value A Key Employee for Key Person Insurance Cover?

We are a small firm considering Keyman Insurance as there are four or so key team members we would really struggle without. How would we go about placing a monetary value on these individuals?

Question asked by Kate Webster
12/06/2020

This is a very good question and one that needs a lot of consideration.

Key Person Insurance provides the business with a lump sum payment should the insured life pass away or become critically ill.

The aim of the cash benefit is to keep the business on the straight and narrow during difficult times.

Valuing Individuals for Keyman Insurance

The value you place on losing a key person should reflect the loss in profits to the business. For example, key person cover might equal the amount of profit typically generated by a sales director.

You can also include additional costs you may incur, such as those associated with finding, hiring and training another individual to the same standard.

However, this is a simplified example — not every key person will contribute so directly to profits as a sales director.

The team at Drewberry is trained to help put a value on less tangible contributions to the business. We use a range of calculators which we can work through with you to help you choose a suitable level of cover for your key members of staff.

Moreover, our advice is totally fee-free, so get in touch today on 02074425880 to get started with valuing key people within your business.

Compare Top 10 UK Providers

Takes approx. 60 seconds
Verified by Norton Symantec icon
 Or Call Us

Frequently Asked Questions

Contact Us

Head Office & Pensions and Investments
Senator House
85 Queen Victoria Street
London
EC4V 4AB
Personal Insurance & Accounts Payable
Telecom House
125-135 Preston Road
Brighton
BN1 6AF
Drewberry London Office MapDrewberry Brighton Office Map

If you are unhappy with our service, we have a complaints procedure, details of which are available upon request. If you are unhappy with how your complaint has been dealt with, you may be able to refer your complaint to the Financial Ombudsman Service (FOS). The FOS website is www.financial-ombudsman.org.uk.

Drewberry Ltd is registered in England and Wales. Companies House No. 06675912

Drewberry Ltd registered office: Telecom House, Preston Road, Brighton, England, BN1 6AF. Telephone 0208 432 7333

Drewberry Ltd (Financial Conduct Authority No. 505473) is an Appointed Representative of Quilter Wealth Limited and Quilter Mortgage Planning

Limited, which are authorised and regulated by the Financial Conduct Authority.