Running a business comes with its own set of complications that arise when something unexpected happens. Failing to prepare for these contingencies leaves your business in a vulnerable position.


Key person cover is intended to protect a business against the financial impact of a key individual’s unforeseen death, terminal illness, permanent disablement or suffering of a critical illness. The proceeds of the life insurance policy are used to stabilise the business and to ensure its ongoing success without the key individual.

Many businesses implement insurance cover to protect their tangible assets (for example – property, plant and equipment), however not all businesses insure against the negative impact of something happening to their human assets. Often the human assets are the ones that drive the businesses performance and success.


A key person is an individual whose consistent involvement is essential to the performance and ongoing success of the business.

In a small business, this is usually the owner, the founder(s) or a key person that possesses one or more of the following characteristics:

  • Responsible for the generation of new business and sales;
  • Holds valuable relationships with contacts, suppliers and customers;
  • Possesses specialised industry knowledge and experience;
  • Possesses specialised technical knowledge and experience;
  • Performs a particular task or role that is difficult to replicate;
  • Has access to credit and can provide the business with capital injections;
  • Holds goodwill.


Key Person cover will normally be categorised as Key Person Revenue or Key Person Capital cover.

Key Person Revenue cover will assist in lessening the negative impact on the businesses profitability. The sudden loss of a key person may reduce the businesses revenue and increase costs. The proceeds of a Key Person Revenue policy could replace lost revenue as well as pay costs associated with recruitment and training of a suitable replacement.

Key Person Capital cover will assist in preserving the capital value of the business, as well as providing a lump sum capital injection to stabilise the business. The proceeds of a Key Person Capital policy may also be used to maintain the businesses credit standing, repay debt or for the repayment of internal loan accounts.

Speak to your Business Insurance Adviser or Alex Roe to fully understand Key Person cover and protecting your business.

This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is suitable for you and your personal circumstances.