Key Person Insurance - Red Sky Insurance

Key Person Insurance

Key Person Insurance

A key person insurance policy, such as a key person protection, helps safeguard a company against the financial impact of death, terminal illness (if the life expectancy is less than 12 months), or a specified critical illness (if chosen for an extra cost at the outset) of a key person.

Policy proceeds are paid directly to the businesses to help replace the key person and help cover any profit loss. The policy proceeds could help your business to continue trading.

Key person insurance is where a business insures itself against the financial loss it would suffer in this eventuality. It’s about giving your shareholders the confidence that your business can survive and thrive even in the event of losing a key person through death or a specified critical illness.

A key person insurance policy should be considered if any loans or financial commitments depend on that person, whether their loss would have an impact on sales, or whether their absence would impact on future planning.

A key person would be defined as someone who plays a vital role in the financial success of a company. It may be a founder or the person who sets the business strategy, a salesman responsible for bringing in profitable business. It might even be your technology guru who knows things no one else in the company understands.

Things To Consider

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    You may want to consider life insurance if you have a mortgage and you want to leave a debt free estate, or if there are people who rely on you financially, like your partner or children. Life insurance can also help cover the cost of funerals, or even if you want to leave your children something when you pass away.
    Life insurance can be set up to cover a specific length of time or even for the whole of your life. Various factors will determine the cost, such as age, health and level of cover. You can control who the money will be paid to and for how long you want the policy to be in place.
    Under current tax rules, pay-outs for critical illness, terminal illness and death claims are usually free of personal liability to pay income tax and capital gains tax. However, in some circumstances your pay-out may be subject to inheritance tax. You can normally help avoid this by putting your plan in trust. Bear in mind that the law relating to tax may change in the future. (For tax planning, we act as introducers only)
    <p>When you choose to take out a life insurance policy with one of our providers, they <br />pay us a commission. Our service is always fee-free.</p>
    This depends on your individual circumstances as the amount of cover required is often different for each family. If you are married, have a large mortgage and four children then you are likely to need more cover than a single parent living in a rented flat with one child.
    Yes, you can have more than one life insurance policy.
    Many couples take out joint life insurance policies, due to the convenience and in order to save money, as it is cheaper than taking out policies on an individual basis. However, joint life insurance usually only pays out once, on the first death, leaving the surviving partner without cover.

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