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13 Keyperson cover 13.1 Definition and use to meet customers needs A life andor critical illness policy taken out to cover the life of a key person within a business. Within a business, particularly a small business such as a doctors practice or law firm, there may be key individuals without whom the business may struggle. If the business is a partnership these individuals or partners may each have made a financial contribution to the business. If one of these individuals dies, suffers a critical illness or longterm incapacity, keyperson insurance pays a lump sum benefit to the business. This lump sum can be used to buy out the individual from the partnership, cover any loss of profits as a result of the loss of the keyperson, meet the costs of finding a replacement. The benefit payable may be based on loss of profits to the business, or related to the salary of the key person to facilitate recruitment of a successor. 13.2 Existence of a group version Keyperson insurance is purchased by a company for its own benefit, covering particular employees. It is unlikely to be purchased as a group version covering many employees.