29th July 2019

We were contacted by the Group FD.  The parent wanted to insure a director of an exporting subsidiary who had developed new international markets for its goods.  The resultant profits made a significant contribution to the group and it wanted business protection against its risk of financial loss on death, terminal or critical illness of the key person.

How did we help?

We identified the most appropriate solution – Key Person insurance, otherwise known as Keyman.

We arranged for trading subsidiary to take out a life insurance policy on the key person’s life which included critical illness cover.  Thus, as the policy is owned and paid for by the employer, it means that the benefits pay-out is payable to the employer.

We helped the Group FD calculate the optimal sum assured based on several factors.

What type of life insurance?

We discussed the different types of cover available and researched the market for best terms, subject to medical and financial underwriting.  On this occasion we recommended a 5-year renewable term assurance plan including critical illness.  The renew-ability meant that at the end of the initial period the company could extend cover for the key person without the need for medical underwriting i.e. guaranteed insurability (provided that the initial underwriting allowed this valuable clause to be retained).

We submitted multiple applications due to the significant sum assured and arranged for one of them to take the lead and coordinate medical information in order to improve efficiency and avoid duplicity for the client.  The reason for applying to multiple providers is because the sums assured were much higher than average and final terms after underwriting can differ materially from the original quotation which assumes ordinary terms being offered; in reality special terms are often applied after underwriting and the best quote may not turn out to be the best final terms.

A typical question on most life insurance application forms is:

“Are you currently living outside of, or during the next 12 months, do you intend to spend more than 30 days outside of the EU, other Western European countries, North America, Australia or New Zealand? You can ignore holidays lasting less than one month, business trips of up to one week provided they do not total more than 12 weeks and postings as members of HM Forces”

Given the extensive travel of the key person and his necessary visits to some countries with heightened risks of crime, terrorism and political instability we helped the company to submit a the key person’s travel plan including the safety and security measures to be adopted.

How did the company benefit from our advice?

We helped the company protect itself from the financial risk of loss on the death, terminal or critical illness of the keyman.

Our expertise helped to project manage the best value for money outcome together with a smooth coordination between insurers to minimise time spend by the key person in completing the process and only having to attend one medical screening at his convenience.

Trusts and Tax Planning are not regulated by the Financial Conduct Authority.

The case study is purely for information purposes and does not constitute advice. For advice based on your individual needs and circumstances please contact us.