Personal Insurance

[Toon]

Hi. I've recently re-mortgaged and my IFA spoke to me about critical illness cover. My only source of income is from my business so it got me thinking if I should take our key person insurance. Is there a difference between the 2 and which would you recommend?

 

[Mark T Jones]

There are any number of questions you need to address with yourself - and your dependents to get a meaningful answer to this.

A really good IFA will lay out those questions and present options without any obligation to buy

 

[WaveJumper]

One maybe for @Frank the Insurance guy

 

[Frank the Insurance guy]

Thanks @WaveJumper .

Not my area of expertise - as @Mark T Jones says - you really should talk to a Financial Adviser. They will look at your circumstances and will advise on best options for you.

There are different covers available, Critical Illness, KeyMan Insurance, Income Protection etc.

I understand Keyman Insurance is generally a lump sum payment to the business on death of a key person (such as a director).

You need to consider whether you are looking for a lump sum payment or for loss of earnings whilst you cannot carry on your usual role.

A Financial Adviser will look at all options for you.

 

[Paul Kelly ICHYB]

Keyman Insurance is generally a lump sum payment to the business on death of a key person

Paid to the business, not family?

 

[Mark T Jones]

Paid to the business, not family?

IFA question, but from memory it's a choice, with slightly different tax implications.

 

[Frank the Insurance guy]

Paid to the business, not family?

Keyman is paid to a company - its a lump sum that compensates the company for the loss of value that the key employee brings to the business. It could be a director, or and employee "brains" with all the design knowledge - without that person the business would be affected and will need additional resources to ride out any short term financial drops or costs of recruitment/head hunting a suitable replacement.

Keyman Insurance lump sum payment can also be used by the company to buy the directors shares from his estate - On death, the shares in the company may be part of the estate.

If a lump sum payment is required to be paid direct to the family, this should be under a Company Life Assurance policy, where the director can nominate the beneficiary.


Any IFA's on here who can confirm the above?