How Much Does Keyman Insurance Cost In 2021?
Insurers calculate the cost of Keyman Insurance based on both personal factors relating to the individual(s) insured as well as policy factors, such as the amount of cover you need.
The older you are, the higher the cost of Keyman Insurance premiums. This is because you are more likely to pass away or suffer a critical illness during the policy term the older you are.
Smokers pay more than non-smokers for most insurance cover as they tend to die earlier than non-smokers. Moreover, they’re more likely to become ill — and seriously ill — than non-smokers, further bumping up the price of Keyman Insurance.
General State of Health
Insurers consider your health and pre-existing conditions when pricing Keyman Insurance. You might therefore pay higher premiums for the Life Insurance part of a policy if you have high blood pressure, for example.
With Critical Illness Cover, if you’ve suffered a condition such as cancer, the insurer might place an exclusion on paying out for that type of cancer if it comes back rather than upping premiums.
Hazardous Hobbies / Activities
Keyman Insurance costs more for those who regularly do hazardous activities due to the heightened risk of death / injury associated with them.
Such risky hobbies generally include skydiving, outdoor rock climbing, motocross, deep sea diving / caving / wreck exploration etc.
As for policy factors, the biggest influence on the cost of Key Person Insurance is first and foremost the size of your benefit. The more cover you need, the higher your premiums.
Other important policy factors that impact the price of cover include:
The longer you think a key person will be key to the business and therefore need cover, the higher your premiums.
This is because the policy will cover the key individual to an older age, meaning there’s therefore a bigger chance of death / critical illness during the policy term.
Adding Critical Illness Insurance
Adding Critical Illness Cover increases the cost of premiums considerably. However, it means the company gets a payout if a key person develops one of several relatively common illnesses (e.g. cancer, heart attacks and strokes), as well as if they die.
Critical illnesses are considerably more likely than death. For example, half of everyone in the UK born after 1960 will get cancer at some point in their life according to Cancer Research UK. Meanwhile, the British Heart Foundation reveals someone has a stroke in the UK every 5 minutes.
Average Monthly Keyman Insurance Premiums
Given insurers look at so many factors when calculating the cost of Keyman Insurance, it’s not always east to pin down what your premiums will be.
However, the table below offers a rough guideline using premiums from our instant online quote engine. To get these figures, we’ve made various assumptions about each key person. For example, we’ve assumed they’re:
- A healthy non-smoker
- A company director with office-based duties
- Seeking £150,000 of Life Insurance or £150,000 of combined Life Insurance and Critical Illness Cover
- Wanting level cover that won’t reduce in value over the policy term
- Looking for protection over the next 10 years.