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When a key person in a business dies it can have a devastating financial effect. You can help safeguard your business against the death, terminal or critical illness of a key person with key person protection.
Put simply, Key Person Protection (also known as key man insurance or key person insurance) is a business insuring itself against the financial loss it would suffer if a key person in their business died or were diagnosed with a specified critical illness if chosen, during the length of the policy. It also pays out if the key person is terminally ill.
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.
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.
If a term plan has been affected, then HMRC may allow the company to obtain tax relief on the contributions if:
We advise businesses taking out any form of key person insurance to speak to their local Inspector of Taxes to clarify their individual tax situation.
Get in touch to find out how we can help the key people in your business.
I run a successful company and turned to Pete for our pensions auto enrolment. This was completed on time and in budget. As a result he now manages my SIPP. He explained pensions in a simple way to staff and. We meet twice a year or as required to do my review.