|
More on Keyman Insurance
A definition of keyman insurance: A protection policy taken out buy a business over the life of a key employee. In the event of a claim the keyman insurance proceeds are received by the business and used to cover the cost of a replacement and/or underpin temporary loss of profits.
Types of keyman insurance policies: Keyman insurance can provide lump sum protection in the event of either death or diagnosis of a critical illness ( as defined by the insurance company). Alternatively keyman insurance can provide a monthly income to the business in the event that the key individual is ill and unable to work for a prolonged period of time.
Taxation of keyman insurance premiums: there is no firm guideline regarding the tax treatment of keyman insurance premiums and whether they should be classed as a business expense. Factors which effect this are whether the keyman is a shareholding director, whether the cover is to protect against loss of profits caused by the loss of the service of the keyman and also the term and nature of the policy. Guidance should be sought from your local inspector of taxes once you have taken out the policy to ensure that your accountant treats the keyman insurance premiums in the appropriate manner when producing your annual accounts.
Factors which effect the cost of keyman insurance: As with all typos of protection insurance, keyman insurance becomes more expensive as we get older. Other factors which might result in premiums being increased further include:- extensive foreign travel, taking part in hazardous pastimes- e.g. private aviation, rock climbing, motor sports and general health and well being.
Application process: To arrange keyman insurance you must initially complete and submit an application to the insurance company. The underwriters will assess the keyman insurance application and may either make an immediate decision or request further evidence to support the application. The higher the level of keyman insurance required the more evidence the insurance company is likely to require. In the first instance they may write for a report from your GP and/or ask you to attend a basic medical screening. When levels of cover approach £1m then financial evidence may also be required to
|
