What is Key Person Cover?
A business protection policy that provides a financial safety net if a critical member of staff dies, is diagnosed with a critical illness or unable to work due to illness or injury.
Why Is Key Person Cover Important?
1. Protects Revenue
Losing a key employee can impact:
- Sales and profits
- Client relationships
- Operational efficiency
A payout helps replace lost income while the business stabilises.
2. Supports Business Continuity
The funds can cover:
- Recruitment costs
- Temporary staff
- Training and onboarding
This ensures operations continue with minimal disruption.
3. Protects Credit & Lending Facilities
Banks often view key individuals as essential to lending decisions.
Key Person Cover can help:
- Maintain credit lines
- Satisfy loan conditions
- Reassure investors
4. Reassures Stakeholders
Employees, suppliers, customers, and shareholders gain confidence that the business is secure even during unexpected events.
Who Counts as a “Key Person”?
A key person is anyone whose death or disability would have a serious effect on the company’s future profits. The size of an individual’s shareholding level is not necessarily a good indicator of who is a key person, as a non-shareholding employee could easily be key to the business.
They could be:
- Business owners / directors
- Top salespeople
- Technical specialists
- Operations managers
- Product creators or IP holders
What Types of Policy Are Available?
Life cover
Pays a lump sum if the key person covered dies during the policy term.
Critical illness cover
Pays a lump sum if the key person is diagnosed with a critical illness of specified severity.
Income protection
Pays a monthly amount in the event the key person is unable to work due to illness or injury.
