Keyman insurance is, in essence, a business contingency plan. The policy is owned by the business and is put in place to protect against the potential loss of income generated by staff members or the potential costs associated with replacing that individuals.
The business may take out a policy on one or more staff members who generate a large percentage of profits for the company or who play a key part in the overall business.
Should any of these key people suffer a critical illness or pass away then the business will receive a lump sum to cover any loss of income or cover any expenses associated with finding a suitable replacement.
Why You Should Consider Keyman Insurance
The Purpose of Keyman insurance is to provide emergency funding at a time when the company needs it most. If your revenue is generated by key members of staff, this protection is an essential part of any business contingency planning. The lump sum provided should your key person become incapacitated can pay for any loss in profits caused, any compensation which has to be paid out or funding to cover the replacement and training of staff.
Who Is It For?
The policy is simply a life insurance policy or a life insurance and critical illness on a staff member, however, it’s taken out by the business for the business therefore all premiums must be paid by the business. The lump sum payment should something happen to the insured party goes straight to the business.
This is not seen as a P11D benefit and as such is very tax efficient for the business too as the policy is also deductible from corporation tax making a further 20% saving on the premiums (CT rate correct of March 2015).
To find out how Keyman cover could benefit you and your company, simply contact us and one of our friendly staff will be happy to help.
**Tax treatment varies according to individual circumstances and is subject to change**