What Is The Difference Between Keyman Insurance & Relevant Life Cover?

Owned and paid for by the business

Owned and paid for by the business

Protects a company by ensuring cash for business continuity purposes should a key person pass away or become critically ill

Protects against the death of an individual by paying out a tax-free cash lump sum to the family of a deceased employee

Key Person Cover is often taken out to ensure business continuity should a key individual dies or suffer a serious illness.

It can often be a stipulation from a lender or investor who wants to protect their stake in the company

Relevant Life Insurance is typically taken out by directors themselves (paid for by the business) for family protection purposes.

It can also be used by micro firms to provide a level of personal life insurance to their employees where they do not have enough members to set-up a Death In Service scheme.

When used for business continuity purposes the benefit is paid back into the company and is therefore typically treated almost as taxable trading receipt

Depending on how the policy is set up and its purpose, premiums may be a tax deductible business expense, but check with your accountant and your local tax office

Premiums qualify for corporation tax relief, income tax relief and National Insurance relief when compared with a Life Insurance policy you take out personally

Add Critical Illness Cover for a more comprehensive protection that includes cover for a list of critical illnesses / injuries as well as death

Any protection against illness must be paid for separately for tax reasons, perhaps with Directors Income Protection

The sums assured with Keyman Insurance will depend on your business metrics and how key a particular individual is to the company

With Relevant Life Cover, the sums assured are typically represented as multiples of your remuneration in the form of salary and dividends

AIG

AIG Life is the UK arm of US insurance giant American International Group Inc. The insurer got its foothold in the UK protection market when it acquired Ageas Protect in 2014.

• Maximum entry age: 86 for Life only / 75 for Life and Critical Illness Cover
• Minimum term: 3 years
• Maximum term: 70 years for Life only / 50 years for Critical Illness Cover
• Maximum cover: No maximum
• Critical illnesses covered: 41, plus 10 additional critical illnesses

Aviva

Aviva was formed out of the Norwich Union-CGU PLC merger in 2000, but the company can trace its roots back to the 17th century.

Aviva Key Man Insurance forms part of its Business Life Insurance Options policy.

• Maximum entry age: 89 for life only / 64 for Life and Critical Illness Cover
• Minimum term: 1 year
• Maximum term: 50 years
• Maximum cover: No maximum for Level Life / £5 million for increasing life / £3 million for Life and Critical Illness / £2 million for Life and Critical Illness Cover with Total Permanent Disability
• Critical illnesses covered: 41, plus 11 additional critical illnesses

Legal & General

Legal & General was founded in 1836 and has since grown to become an international provider of insurance, pension and investment products.

• Maximum entry age: 77 for Increasing Life Insurance / 67 for Life and CIC and Increasing Life and CIC / 74 for Decreasing Life / 64 for Decreasing Life and CIC
• Minimum term: 1 year for Life / 2 years for Increasing Life Insurance and CIC / 5 years or Decreasing Life and CIC
• Maximum term: 50 years for Life only / 40 years with added Critical Illness Cover
• Maximum cover: Unlimited
• Critical illnesses covered: 39, plus 2 additional critical illnesses

Royal London

Royal London began as a friendly society in 1861, later changing to a mutual society in 1908. Today, Royal London is now the UK’s largest mutual life, pensions and investment company.

• Maximum entry age: 88 for Life Cover / 69 for Critical Illness Cover
• Minimum term: 1 year for Life / 5 years for Critical Illness Cover
• Maximum term: 72 years for Life only / 50 years with added Critical Illness Cover
• Maximum cover: No maximum for Life / £3 million for Level Critical Illness Cover / £1.2 million for Increasing Life and Critical Illness Cover
• Critical illnesses covered: 46, plus 14 additional critical illnesses

Aegon

Aegon was founded as Scottish Equitable in 1831. Dutch insurer Aegon N.V. bought a 40% stake in Scottish Equitable in 1994 and became a 100% stakeholder in 1998.

Maximum Cover:

• Up to age 35: 30 times remuneration
• Age 36-50: 25 times remuneration
• Age 51-60: 20 times remuneration
• 61+: 15 times remuneration

• No financial evidence required for sums less than £2,500,000

Legal & General

In 2015, Legal & General won the ‘Life Insurance Provider of the year’ award from the Personal Touch Awards.

Maximum Cover:

• Age 18-49: 25 times remuneration
• Age 50-59: 20 times remuneration
• Age 60-73: 15 times remuneration

• No financial evidence required for sums less than £3,500,000

Scottish Widows

Scottish Widows is a highly praised provider of pension and insurance products across the UK with nearly 6 million customers.

Maximum Cover:

• Level Term: £25 million
• Increasing Term: £15 million (at point of policy inception, increases permitted to £30 million)

Zurich

Zurich owns locations in more than 170 countries and provides insurance products and services on a global scale.

Maximum Cover:

• Age 16-39: 30 x total remuneration
• Age 40-49: 20 x total remuneration
• 50+ : 15 x total remuneration