Key Person Protection
Every business has someone the numbers quietly depend on. This is how you insure that.
Picture your business six months after losing its most important person, whether that's the rainmaker, the founder or the one engineer who can run the critical kit. Revenue dips, recruitment costs spike, customers get nervous, and the bank notices. Key person protection is a policy the business takes out on that person's life (and usually critical illness too), paying the company a lump sum to absorb exactly that shock.
It's some of the cheapest balance-sheet insurance a small company can buy, and among the most commonly missing. I help Kent businesses identify who their key people really are and arrange proportionate cover from a wide market.
What working together looks like
Identifying the real key people
It's not always who's on the letterhead. I work through where revenue, relationships and critical knowledge actually sit, which is often a shorter, different list than assumed.
Cover sized from your accounts
Multiples of salary, share of gross profit, the cost of a two-year recovery. I apply the standard methods to your real figures and sanity-check the answer against what the business could genuinely absorb.
Owned, paid and taxed correctly
A company-owned policy, premiums and payouts with the right tax treatment, reviewed when people or profits change. Structure is half the value here, and I handle it for you.
A Medway engineering firm came to me with an operations director who was the only person certified on the machinery producing 70% of output. My questions took ten minutes to establish that losing her would halt production for the four to six months certification takes. Key person cover sized to bridge that gap (lost margin plus an interim specialist) costs the firm less monthly than its coffee supplier. The point isn't the premium. It's that nobody had asked the question.
Asked all the time, answered honestly
Who counts as a 'key person'?
Anyone whose death or serious illness would measurably damage profits, whether that's founders, sales leads, technical specialists or a crucial employee nobody outside the business has heard of. If losing them would cost money and time, they qualify.
How is the payout used?
However the business needs it, whether replacing lost profit, funding recruitment and training, reassuring creditors and customers, or repaying borrowing tied to that person. It's working capital for the worst quarter the business will ever have.
Is key person cover tax-deductible?
Premiums can qualify for corporation tax relief where the cover is purely to protect profits and meets HMRC's conditions, but then payouts are usually taxable as a trading receipt. Policies protecting capital or loans are treated differently. I set out the treatment for your structure before anything is signed.
Should it include critical illness cover?
Usually worth serious consideration. During working age, a key person is statistically more likely to suffer a serious illness than to die, and the business impact of a long absence is similar. Many firms insure both events on the same person.
How is this different from shareholder protection?
Key person cover pays the business to survive losing someone's contribution. Shareholder protection funds the surviving owners to buy a deceased owner's shares. Businesses with co-owners frequently need both, since they solve different problems triggered by the same event.
Let's talk about key person protection
A free, no-obligation chat is the easiest first step. Tell me what you're hoping to do, and I'll tell you honestly how I can help.