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Key Person Insurance

Key person protection is life and/or critical illness cover which is taken out by the employer on the life of a key employee to assist the business in trading through any difficulties which it may incur if the employee is recuperating or is being replaced. The cover is designed to replace the lost profit suffered by the loss of the key employee.

The life and critical illness cover sum assured is usually paid to the employer as a lump sum, however cover can also be taken out to provide a regular income to the employer should the employee be off work for an extended period of time. This type of cover would pay the income once the employee has been off work for a period which is longer than the deferred period of the policy.

The deferred period can range from 4 weeks to 104 weeks. Product providers usually offer deferred periods of 4, 8, 13, 26, 52 and 104 weeks.