Key Person cover

by Aviva Community Fund | Nov 12, 2019 | Risk protection for community causes

Key Person cover

Whether you work for a large charity with paid employees, or a small community group made up of volunteers, there will be certain people that you can’t imagine life without. The ones who keep the show on the road. So, have you ever thought how your cause would carry on if they couldn’t do their normal duties?

What is Key Person cover?

If a key person within your organisation dies or suffers a serious illness, it could have a devastating financial effect. So Key Person cover is simply a life insurance – or life and critical illness insurance – policy for that person vital to your organisation.

Does my charity need it?

A policy pay-out could help cover:

  • a loss of funds or profit
  • expensive recruitment costs
  • any penalties for the non-delivery of goods or services.

Which key person needs covering?

When assessing the risks and deciding who to cover, it’s important to consider these questions:

  • What’s the person’s impact on the profitability or fundraising abilities of your charity?
  • What’s the person’s job history and qualifications?
  • What are the person’s key skills?
  • Would it be difficult or expensive to replace them?
  • What’s their level of seniority within your organisation?
  • Are there other key people within your organisation you need to cover?

How much cover do we need?

Cover requirements will vary from one key person to another, depending on the impact of losing that person. Revisiting the questions above and trying to add a value to them will help with working this out.

You’ll also need to decide whether you need life insurance only (to cover the key person passing away unexpectedly) or critical illness cover too (for if the key person is diagnosed with a defined illness that affects their day-to-day duties).

Critical illness cover

Critical illness cover pays out on your insurer’s defined list of illnesses, often offering a primary level of cover and then an additional list. This varies from one insurance provider to another, and usually only covers the most serious and disabling illnesses and injuries.

What next?

If you’d like to know more about Key Person cover from Aviva or get a quote, please speak to your financial advisor.