Key Man Insurance - Key man Insurance provides cover for “important” persons in a business, not just directors or managers but anyone with a specialist skill whose presence would have a detrimental effect on the business should they die or become seriously ill.

How does 'key man' work? - the smaller the company, the greater the impact of the absence of a Key member of staff, in the case of a sole trader, death or serious illness can end the business altogether.  Larger firms are sometimes able to absorb an individual’s work but a small business could be hit hard. Profits may fall during the absence of a Key man and there is a whole raft of over financial implications to consider.  With this type of policy, The Company insures the lives of key individuals for a capital sum (this becomes known as the sum insured) commensurate with the estimated financial loss to the business in the event of the employee's death or serious illness.  Key person insurance is a very complex type of Life Insurance contract and you should always take professional advise as to the suitability of this type of insurance contract.  The two types of cover normally associated with this type of insurance.  They are as follows;

Life Insurance - this will normally pay out a sum on the death of the insured Keyman

Critical Illness - this will normally pay out on the diagnosis of any serious medical condition, the list includes the following cancer, heart attack, stroke, coronary artery disease, kidney failure, paralysis, a major organ transplant, heart valve surgery, multiple sclerosis, blindness in both eyes, total and permanent disability, loss of hearing, stage one Hodgkin’s disease, terminal illness, AIDS but only via infected blood transfusion.
 

Examples of Key Persons - just how would identify a Key Person to your business. They could be:-

• Partner - The person who steers the business and has all the business. contacts

• Salesman - The person who’s sale skills actually brings in the customers.

• Designer - The person who’s work sets your company apart.

In the first instance, it is probably to draw up a list of your employees and try to calculate the impact they have on your business. Once you have done this, you can set about obtaining insurance quotes for appropriate cover:-

• Partner: The person who steers your business.

• Designer: The person whose creative flair generates new products.

• Salesman: Your critical conduit to the marketplace.

• Strategist: The person who provides the drive and direction for the company