How does Key Person Protection Work?
Key Person Protection is a life assurance or life assurance and critical illness cover policy taken out to cover the life of a key person within your business. The policy is owned and paid for by the employer, so any pay out is payable to the employer.
Why do I need Key Person Protection?
The loss of a key person in your business could have a severe impact. The business could suffer badly, with sales and profits falling and increased workloads for the remaining staff.
Key Person Protection is designed to pay out a lump sum on the death of the insured key person, during the length of the policy. It is paid as a lump sum and could significantly help the business to recover. The proceeds can be used to help replace lost profit or finding and hiring a replacement.
How would the cover be set up for companies?
The purpose of Key Person cover is to ensure that funds are made available to a business n the death or serious illness of the key person. For companies, it is the company itself who should be the applicant for the cover, on the life of the key employee or director.
The company would own the policy and pay all premiums. A trust is not required. An authorised official of the company, such as the managing director, or company secretary, would make the applicant''s declaration.