Keyman Insurance Calculator

Calculating How Much Key Person Insurance You Need

The level of cover can vary considerably from one firm to the next and depends on your business’ needs and circumstances. However, as a general rule of thumb, when advising our clients on how much Keyman Insurance they need we tend to look at the individual’s contribution to profit, either:

• A set multiple of net profit the key person is responsible for

OR

• A set multiple of gross profit the key person is responsible for.

The multiple of profits you need will depend on whether your company is growing or breaking even. It’s complicated to work out and it’s therefore best to discuss this with your expert adviser to ensure you get it right.

In addition to profit protection you may also require Keyman Insurance for more specific purposes within the business. This is often easier to put a value on — for example, you might know how much it would cost to hire and train a replacement key individual. Here you ensure a payout which covers salary, recruitment costs and any fees associated with training them up to their predecessor’s standard.

Alternatively, you may be looking at keyman cover to repay an outstanding loan, in which case you’d set the level of cover to match the loan.

If you need help pop us a call on 02084327333 or email help@drewberry.co.uk to speak to one of our expert advisers.

Deciding how much Keyman Insurance you need can be tricky.

You don’t want to claim and find you have too little cover, meaning your business struggles. You also need to consider whether tax would be due should a claim arise.

Samantha Haffenden-Angear
Business Protection Expert at Drewberry

Calculating The Cost Of Keyman Insurance

While the business owns and pays for the policy, the cost of Key Man Insurance will vary between companies. This is because, although it’s a company taking out the policy, it’s underwritten on the life of the key person / key people.

This means two very similar businesses in the same sector could pay wildly different amounts for Keyman Insurance if the insured people at each firm have wildly different backgrounds.

For example, the price of cover is based on an individual’s:

• Age
  The older we are, the greater the risk of passing away during the term of the policy.
• Current state of health
  Those with health conditions, especially those which might limit life expectancy, will typically pay more for Key Person Insurance to reflect the greater risk the insurer is taking on.
• Smoker status
  If the key individual smokes, they are at greater risk of developing a serious, fatal health condition and so insurers charge more.
• Lifestyle and hazardous activities
  Lifestyle habits, for example regularly drinking more alcohol than is recommended, or participating in hazardous activities, could result in an insurer increasing the cost of the cover.
• Family history
  Has any of the key individual’s immediate family ever suffered a serious and / or hereditary illness that could impact on them? If so, the premiums may be increased to reflect this.

Another factor influencing the cost of Keyman Insurance includes how long you want the policy to run for. A longer policy will be more expensive as the risk to the insurer is present over a longer period.

Lastly, the cost of cover will depend on how much Keyman Insurance you need (see below). The more cover necessary, the higher the cost of premiums.

Adding Critical Illness Cover

With Key Man Insurance, you can cover an individual on a life-only basis. This will secure a payout should they die. You can also choose to add Critical Illness Cover, so the insurer pays out if the key person develop a critical illness as defined in the policy terms.

This will notably increase the cost of your cover, however. This reflects the fact that a critical illness is much more likely over the policy term than passing away.

Average Cost Of Keyman Insurance

To come up with the premiums in the table below, we’ve assumed the individual is:

• A healthy non-smoker
• Looking for a 10 year policy
• Seeking £150,000 of Keyman Insurance on a level basis.

Who Are The Top Keyman Insurance Providers In The UK?

We are an independent advisory firm which provides Key Person Insurance quotes from every leading UK Insurer. Below is a list of the main insurers we work with to protect businesses up and down the country:

• Aegon
• AIG
• Aviva
• Legal & General
• Liverpool Victoria
• Royal London
• Scottish Widows
• Vitality
• Zurich.

No two insurers are the same, with some preferring certain types of risk more than others.

This makes it really important to compare Keyman Insurance quotes from all the leading insurers when doing your research. You can use our calculator to compare the cost of key person cover from all the top UK insurers

Compare Keyman Insurance Quotes & Get Expert Advice

Calculating how much Key Person Insurance you need and working out how much it will cost can be tricky.

Business protection is more complicated than personal protection, one reason why many of our clients find an expert adviser’s assistance in this area invaluable.

Why Speak to Us?

We started Drewberry™ because we were tired of being treated like a number.

We know that our clients give so much to their businesses. They therefore deserve first class service when it comes protecting that business and their interest in it. Here are just a few reasons why it makes sense to talk to us:

• There is no fee for our service
• We are award winning 🏆 independent insurance advisers who work with all the leading UK insurers
• You’ll speak to a dedicated expert from start to finish
• We are very proud of the 3886 and growing independent client reviews rating us at 4.92 / 5
• Claims support when you need it most.
• We are authorised and regulated by the Financial Conduct Authority. You can find us on the financial services register here 🧐

If you need help working out how much key person insurance cover you need pop us a call on 02084327333 or email help@drewberry.co.uk.