Keyperson insurance is a type of protection for a company to have on a non shareholding person within that company. The function of the cover is to protect the company and hence its shareholders against any potential losses in the event of a key person dying.

The quantity of cover is typically valued, based on the expertise, knowledge, experience and contacts that key person may have or alternatively a loan that may be in the name of the key person or on a multiple of the profits of the company.

The policy is generally affected in the name of the company whereby the benefits are for the benefit of the company and not for the benefit of the individual’s estate.