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What is 'Keyman insurance'


The information on this page has been superseded by a new section on Keyman Insurance. Visit the following links for more information -

  • Corporate loan and overdraft protection - Pays out a cash sum for the specific purpose of repaying company debt. Very useful if the directors have personal guarantees or second mortgages in place

  • Ownership Protection - Pays out a cash sum to be used to buy out the deceased (or critically ill) director's or partner's shareholding

  • Keyman insurance FAQs - Lists some of the more common questions and answers

Keyman insurance is one of the most overlooked insurance policies for businesses - but also one of the most important. As a businessman you might have public liability insurance and your buildings, stock and vehicles will be insured. You may even have professional indemnity insurance and legal cost insurance.

But what about if you were to lose one of your key employees or even the boss? This is what Keyman insurance protects against.

The insurance is designed to financially protect a business from the effects of prolonged illness or even death of staff who are central to the prosperity of the company. The insurance can't replace people but it can provide cash to buy time and cover the costs of temporary staff, recruitment, loss of profits or provide a cash injection.

Keyman insurance falls into four categories
  1. Key people - pays money when your key personnel are unable to work or to train/recruit a replacement
  2. Protect profits - cover to protect profits (perhaps your top salesman dies in a car crash)
  3. Protect shareholders and/or partners - cover to protect shareholders or partnership interests, and
  4. Personal loan guarantees - cover for anyone involved in guaranteeing businesses loans or banking facilities
The problem with setting up a Keyman insurance policy

Insuring a car is easy, fully comp, garaged overnight in a safe area, age of driver etc. Most insurers will offer a quote in seconds. The point is that most car insurance policies offer similar cover in a very uniformed fashion.

But businesses are far more complex and this is especially true when working out a Keyman insurance policy. One firm might want profits up to £50k a year insured alongside 3 directors, two of whom are 65 years old.

But another business doesn't need any profit cover, instead wanting to insure 3 members of the sales staff and 2 directors, all of whom are under 40.

Main point - setting up the insurance is often complicated and requires much more thought.

Where to get Keyman insurance

Contact your present bank

It's common for the banks to insist on some sort of Keyman insurance policy when they loan a business money. So a good place to start is to see what your present bank can offer.

Contact other banks

If you presently bank with Natwest, call Barclays (business banking, not personal), Lloyds and the others and have an initial chat. See what they can offer and at what sort of price.

Contact an insurance broker

This is probably the best route as they should not only have experience in the market but have relationships with all the main insurance companies such as Norwich Union (now called Aviva) and AXA etc.

Chances are your business already deals with an insurance broker for cover in other areas such as your car fleet, office insurance and professional liability etc.


Keyman insurance really works well for small businesses, those with under 10 employees which make up the backbone of the UK economy. So if this is you, then think hard about how your business would cope if one of your key employees died or was unable to work for many months because of illness or accident.

As ever though the key to getting the right deal is to shop around, never take the first quote offered and if necessary play one provider off against the other. For example, you might get a good quote from HSBC but presently bank with Natwest. If so ask Natwest to match the HSBC deal.


The information on this page has been superseded by a new section on Keyman Insurance. Visit the following links for more information -

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