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Most businesses and organisations have people whose departure could have a serious financial impact.

While short-term absences can usually be managed, the real issue for many firms is what happens if a key person dies suddenly or cannot work because of a serious illness or disability.

Key-person insurance can provide cover against the financial consequences of losing someone in this way. It is a type of business-continuation insurance. Key-person cover may include a sales director with extensive business contacts and influence, a technical or production director, or a controlling director who has personally guaranteed bank loans made to the business.

How Does Key Person Assurance Work?

Your business can take out an insurance policy on the life of a key person. This policy will pay out to the business if the key person dies, is diagnosed with a specified critical illness or is unable to work because of illness or disability.

The Main Types of Cover

Life insurance pays out on death. In some cases, it also pays out on diagnosis of terminal illness, where the insured person has less than 12 months to live.

Critical-illness insurance pays out on diagnosis of an illness within the policy definition. Critical illnesses are life-threatening conditions but which people often now survive thanks to developments in medical science.

Income-protection insurance pays a regular (usually monthly) income to the business if the key person is unable to work – usually after three months, depending on the policy – because of illness or disability.

In some cases, a policy may include more than one of these elements. In others, we shop around to get the most appropriate options, which might mean using more than one provider or individual policies to meet a particular need.

More About Key Person Cover

For more information, see our Key Person Cover factsheet.

For more information about our services or to speak to one of our consultants, simply complete our enquiry form, send us an email or call our Cambridge office on 01223 720208 or our Norwich office on 01603 692732.

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