Key Man Income Protection – Company Directors Income Insurance

There may be a large quantity of people that are unaware of what key man insurance is. This type of insurance was developed to try and help and protect businesses rather than an individual. This sort of cover offers protection against the key employee of the business becoming ill, injured, killed etc and being made unable to work for your company due to what ever reason. As a result of the main employee being made unable to work for your business it can have a dramatic effect on the company as a whole, it can affect both revenue as in incomings and outgoings, staffing situations and many more aspects of your business.

Whether your business is a small tightly run unit or a large company with endless amounts of staff, Key Man Income Protection insurance can be beneficial to both large and small businesses. Unfortunately life is unpredictable just like our businesses, so if something was to happen to your say business partner and they should die for instance, how would the business manage with out them. In some cases this can lead to an awful lot of trouble for the business.

This type of insurance has various different types to it, these are:

• Loss of Revenue/profits – this type of cover ensures that the business is covered and protected should the key director or key employee have to be absent from work for a certain amount of time. With this type of cover the insurance company compensate the business to cover the hiring and replacement of these important members of staff.
• Capital Protection – this covers the key people of the company as well as any guarantors that it may have. Should a creditor or a bank request any monies from the insured company the insurance will reimburse the companies requesting the payment.
• Executive Income Protection – this protects the company director’s income should they become ill or injured. They are only covered by this insurance at their place of business and work. This type of cover is often classified as being not a benefit of kind but an actual business expense which can be sometimes seen as an extra advantage. If you were to submit a claim with this type of cover, the benefits of the policy will be paid in the ways a salary would to the involved director but will be less tax as it is a taxable item. Typically it is only 50% – 60% worth of the income to be taken into consideration.
• Buy/Sell Key Man Income Protection – This type of cover offers protection for the business shares and partnerships. It offers a facility to transfer business interests between owners when needed.

With any kind of personal or business protection insurance you never know what may happen whilst running your business. You should always take into consideration that you may need cover for the unexpected and try and prepare for these possible eventualities. If a main member of your team was to be off ill for a while or die, the expenses incurred of hiring people may be significant.