Key Person Insurance

Protecting the people a business relies on

Key person insurance is taken out by a business to protect against potential financial losses arising from the death or extended incapacity of an important employee or director.

The cover provides a fixed monetary sum if the insured person dies or suffers a critical illness covered by the policy. It can help protect profits and support continuity while the business recruits a successor, replaces lost expertise or manages disruption.

Who can be a key person?

A key person may be a director, partner, salesperson, project manager or anyone whose skills, knowledge, relationships or contribution are especially valuable to the business.

Tax considerations

The tax treatment of premiums and benefits depends on the purpose, term, employment relationship and shareholding involved. If premiums receive corporation-tax relief, policy proceeds may be taxable. Each case should be considered with appropriate tax advice.

HM Revenue & Customs practice and the law relating to taxation are complex, depend on individual circumstances and may change. The plan has no cash-in value and cover will lapse if premiums are not maintained.