Protecting your business: What you need to know about key person insurance

Posted on

If you’re a business owner, there will be plenty on your mind. From the day-to-day tasks to a long-term strategy, you’ll need to make many decisions. But if you or another key worker were ill, how would your business fare?

The loss of a keyworker can devastate a business. It can mean immediate challenges are left for remaining staff and affect long-term ambitions. Yet, many small and medium sized businesses haven’t taken steps to protect themselves should something happen to a key worker. It’s an oversight that could mean the business is unable to recover should something happen.

Less than 1 in 5 SMEs cover key people

Similar to taking out protection products to ensure your home, possessions or car, key person cover protects your business should something happen to those who are fundamental to your firm’s operations.

Key person insurance is usually similar to a life insurance policy, it will pay out a lump sum if the named key person passes away. However, additional protection can also be taken out to cover illness. The money paid out can provide a cash injection when the business needs it, allowing the firm to continue operations and help with the recruitment of new staff where needed. The business pays the premiums of a key person policy.

Despite the security key person protection can provide, it’s something the majority of SMEs (small and medium-sized enterprises)  are overlooking.

Research from Legal and General found that just 18% of SMEs have any insurance to cover key personnel. While 63% of businesses said the death of an owner would have the biggest impact on their business, 40% have no continuity plan in place at all.

While we hope nothing will happen to ourselves or others, the unexpected can happen. Key person insurance can provide businesses with stability if things outside of their control mean that key personnel are no longer able to work due to illness or death.

Who are your key people?

The Legal and General research found that 99% of businesses agreed they have at least one key person. Some 38% said they had three or more.

So, who are the key people in the business?

If you’re a business owner, you’re likely to fall into that category yourself, particularly in the early years. Ask yourself how successfully your business would be able to operate without you. If there would be challenges, it’s worth considering key person protection.

Other employees may also be key people to your firm. Ask yourself if the loss of an employee would affect profits and mean your business would face financial hardships. While this includes direct sales, you should also consider other areas, for example, the value of skills, innovation, networks and an understanding of how the business operates that an employee brings.

Thinking about key person insurance can be challenging. But it can give you and the business vital breathing space to make the right decisions, rather than be rushed into them.

The loss of a key person in an SME can have a huge impact. It can mean the rest of the staff face increased workloads, the loss of important skills and knowledge, lost profits and, in some cases, termination of the business.

Choosing the right key person policy for you

If you’ve decided key person insurance can provide security for your business, it’s important that you take out a policy that suits your needs. There are three questions you should answer first:

  1. Who should your key person insurance cover?
  2. What circumstances should be covered?
  3. What level of cover do you need?

With these answers, you’re in a better position to review and compare different policies and understand when they’ll provide you with protection.

Another important factor to consider is the premiums you’d pay for different policies. These can vary significantly between different providers, but other factors will influence how much a policy will cost too. This will include the level of cover you want, as well as the health and lifestyle of the key person being covered. We can help you find a competitive product that gives you the peace of mind you need.

However, it’s not just key person insurance you should consider. It’s just one part of a business continuity plan that can provide security. Please get in touch to discuss your business and the steps you can take to create long-term stability.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.


We aim to keep our clients up to date on interesting and relevant financial news.

You can sign-up to receive our monthly newsletter by email, even if you’re not yet a client. Sign-up using the form below.

Client testimonials

I have always found Black Swan to be caring and understanding of my quirky lifestyle. I always feel they try to get me the best returns while respecting my current needs.

Sally Muir

A client since 2011

We would be very happy to recommend the support and service we receive.

Valerie Locks

A client since 2010

I have always been completely useless regarding finance - thankfully our financial adviser is not! I've retired with far more than I ever expected and investments continue to grow safely. So - thank you!

Bernadette Jane Warner

A client since 2000

Very happy with the professional service I have received and feel a lot happier now with my finances put in order.

Martin Field

A client since 2011

Julie Cooper was recommended to me by a work colleague. She has been very helpful, professional and has explained everything well. I would definitely recommend her services to anyone else who are interested in a financial review.

Steven Rooke

A client since 2018

…Service has been first class.

Hugh Fells

A client since 2012

My face to face meetings with Rob Young and Jessica Lyons have always been very open and understandable. My questions have been answered clearly and I have left feeling that my financial matters are in good hands.

Sandra Jack

A client since 2000

[A] safe pair of hands in a complex financial world.

Gary Middlehurst

A client since 2003

A reliable company with good communication skills and good knowledge of the financial markets.

Alan Evetts

A client since 2014

Maureen Pembridge is a long-time trusted advisor to our family. The market might fluctuate but her attention to detail is consistent.

Linda Burnard

A client since 2000

I am pleased to recommend Julie as a trustworthy financial advisor. She explains financial jargon in plain language, and always listens carefully to my particular financial needs and has helped me make the best of my savings.

Carolann Samuels

A client since 2010

I have always been satisfied with the way that Black Swan has handled my account. And I have always found the staff very helpful whenever I need to call the office.

Robert Anthony Matthews

A client since 2012

An excellent personal service from a person I know and trust.

Michael Dalton

A client since 2010

I am getting a very good services from Black Swan, they have got my investments sorted out which was in a bit of a mess.

Roy Jakens

A client since 2012

A good, efficient team providing clear ideas to shape a winning strategy.

Adrian Michael Levenstein

A client since 2011

Black Swan is a company to be trusted, with friendly staff and professional advisors.

David Brian Jennings

A client since 2017

I have been with Black Swan for many years. I have never wished to change anything. They give a good straight forward service.

Martin Barrett Brooks

A client since 2010

Andy Peters has been invaluable in firstly combining several pension pots and then giving excellent investment advice. It has given us a great deal of comfort to know that our financial affairs are in such good hands.

James Guillum Scott

A client since 2014

I find my financial advisor easy to talk to and feel that she understands my lifestyle. She is always available for help when I need her and explains in words that I can understand.

Margaret Ena Glasgow

A client since 2000

Andy is a first rate Director, excellent communicator and leader.

Ross Perry

A client since

Black Swan Financial Planning and Andrew in particular, are very clever at working out how risk averse we are, and coming up with solutions that we feel comfortable with. We are happy in the knowledge that we can continue to enjoy a comfortable retirement. Andrew Peters is a very, very friendly person who is great to chat to and easy to deal with. He explains things very clearly in layman’s terms, and if we still don’t understand, he explains it until we do!

Alan & Jane Dyer

Clients since 2012

We have always found Rob [Young] to be very approachable and knowledgeable. We have every confidence in the advice given and feel comfortable with the decisions we’ve made. There are certain opportunities that we wouldn’t have known about if Rob hadn’t brought them to light, which makes the advice good value for money as far as we’re concerned.

Peter & Pauline O’Halloran

Clients since 2013

Rob [Young] is extremely knowledgeable. I knew nothing about the different types of trusts which will not only secure my income in retirement, but also leave a legacy for my children. I’m glad that I sought his advice when I did.

Sarah Wilson

A client since 2015

I am extremely happy with the service afforded to me by the company and my adviser Julie Cooper.

Geoff Coxell

A client since 2010

My wife and myself have been dealing with Black Swan for a number of years. We have met with different representatives from the company over the years and have found all very helpful in their own way. We met with James [Anderson] a few years ago and found him very helpful and knowledgeable. He keeps in contact with us on a regular basis. We find the Company information very helpful and we feel very secure with our finances.

Andrew Kirchen

A client since 2015

I have always found my adviser to be easy to contact, very professional in his approach, yet friendly and understanding. I have a sense of an experienced company behind him, really on the ball financially and with good standards.

B McBean

A client since 2011

Partner with the most reliable and experienced team of advisers

Enter your details & we'll be in touch to discuss your needs.
Alternatively, contact us directly and speak to a member of the team.

    Subscribe to our newsletter