KEY PERSON PROTECTION

The intention of key person insurance is to provide a capital sum if a key member of staff:

	Dies
	Contracts a critical illness

This can have a major impact on your business and your ability to continue trading.

The policy insures the key person’s life and pays a lump sum to the business.

The cost can be offset as a business expense, therefore reducing your Corporation Tax, although the benefits are treated as a trading receipt and taxed accordingly.

You insure your key person’s life with a level term policy for a specific period, usually between 5 and 10 years.

This policy may include critical illness cover if required.

If the key person leaves, then you either agree:

	That they are able to take the plan with them, although there may be tax implications
	Transfer the cover to a new key person
	Cancel the policy and start a new plan on the key person

Income Protection
Key person cover can also be arranged to provide your business with regular income if your key person is absent from work owing to long term sickness. The impact on your turnover is equally severe if your key person is ill over a substantial period, as you have the additional pressure of continuing to pay their salary when you may be experiencing a reduction income.

Key person protection is the answer.

This provides a regular monthly amount which can be used to:

	Pay your key personís salary
	Pay a temporary employee who is carrying out the work on their behalf
	Compensate you for the loss to your business of the income usually generated by the key person

The policies are arranged with a waiting period before benefits are paid, which is usually between 3 and 6 months.

Cover is based on:

	Your estimate of the amount of income required, plus the waiting period
	The term of the plan, which is usually between 5 and 10 years

Key person cover is a cost-effective way of protecting your business.
Contact Morgan Cameron ILP Ltd. to discuss your companyís requirements and to obtain a quotation.