Key person
An individual whose death or serious illness would measurably damage a company’s profits.
Insurers and HMRC both use the idea of a key person: someone whose loss would reduce trading income, whether that is a founder holding the client relationships, a technical lead or a sales director. Key person insurance is owned by the company and pays the company, so the money meets lost profit and the cost of replacing the person. HMRC allows a deduction for the premiums only where the sole purpose of the policy is that trade purpose and, for life cover, the policy is term insurance with no other benefits.