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Information on setting up a policy, risks, target market, features and costs can be found in the product profile.Business Protection Life Insurance with Critical Illness product profile
Losing a key person at any time can disrupt a business, particularly if it happens suddenly. Our Key Person cover calculator uses a key person’s contribution to the profits of the business to calculate the amount of cover your client will need.
Setting up the cover
Setting up the cover depends on the legal structure of your client’s business. It should be set up to match the needs of different business types.
Learn more about these options in ourBusiness Protection adviser brochure .
|Business type||Who should be insured||Benefits (separate policies |
should be set up to protect
profits or clear debt)
|How to set up the cover|
|Sole trader||Business owner or key member of staff||If the key person is an employee (not the business owner) the cash injection helps the company protect profits or clear existing debt.||Own life: the sole trader takes out the plan which is written in trust with their family/next of kin as the beneficiaries. If the sole trader dies, the money is paid to the beneficiaries (usually family or next of kin).|
Life-of-another: sole traders can also take out Key Person Cover on an employee. The sole trader takes out the policy on a ‘life-of-another’ basis. Any claim is then paid directly to the sole trader.
|Traditional or ordinary partnership||Partner or key member of staff||If one of the partners dies or has to take early retirement due to ill health, Key Person Cover can be used to pay off any trading debt or keep the business operating.|
If the key person is an employee (not the business owner) the cash injection helps the company protect profits or clear existing debt.
|Own life: if the key person is a partner, the plan is on their own life, written in trust for all the partners. Any claim is then paid to the remaining business owners (through the trustees).
Life-of-another: if the key person is an employee, one of the partners takes out the policy on a ‘life-of-another’ basis, placed under trust for the benefit of all the partners.
|Limited company||Shareholder, or key member of staff||The proceeds give the company a cash injection, which can be used to either:
||Life-of-another: the company takes out the policy on ‘life-of-another’. If a claim is made, the money is paid directly to the company.|
|Limited liability partnership||Partner or key member of staff||The proceeds give the partnership a cash injection, which can be used to either:
||Life-of-another: the partnership takes out the policy on ‘life-of-another’. If a claim is made, the money is paid directly to the partnership.|
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