Vitality Key Person Protection (aka keyman insurance) safeguards the lives of those who matter most to the success of a business. In any company, there will always be specific individuals who make significant contributions to its success. Losing one of those key people can be nothing short of catastrophic, with their loss often jeopardising the financial stability and profitability of the business.
Like products from others in the market, Vitality's Key Person Protection insures the life of one or more individuals (each requiring a separate policy). In the event of their death or terminal illness, the plan pays out a lump sum to help cover losses in revenue or profit. While no amount of money can compensate for the loss of a valued colleague, receiving an injection of capital at such a time can help the business avoid further hardship.
As we mention, Vitality's base keyman product will provide cover for both the death or a terminal illness (i.e. one where the prognosis is death within 12 months) of the insured individual. When you set up your policy, you'll be asked to choose between either a Fixed Term or Renewable Term. As the name suggests, Fixed Term runs for a predetermined length of time, whereas a Renewable Term gives you the option to extend the cover without making a new application. Regardless of which of these you opt for (you can speak to an adviser to help you choose), you'll be given the option of three types of cover:
- Decreasing - this is where the benefit (cash lump sum) gradually reduces over the policy term. This type of cover is typically used alongside a debt which also reduces over time as repayments are made. Owing to the reduction of benefit over time, the premium for this type of cover will also be less than the others in this list.
- Level - this type of cover will give you the same payout size throughout the plan, so whether the key person dies at the start or end of the policy, the amount the business receives will be the same. While this may seem ok and a good option on the face of it, you need to bear in mind that due to inflation, the payout you receive today likely won't go quite so far several years down the line.
- Indexed - to counter the potential shortfall you might experience with Level cover, you can choose to have your plan Indexed, which will mean it rises each year in line with inflation. This option ensures that over time your policy maintains its value in real terms, without you needing to think about it or take out any additional cover.
Like with anything relating to insurance, but especially business protection, you should consult an expert independent broker who will be able to help you choose the right option for your circumstances. With these policies often running for several years, it is key (excuse the pun) to spend some time upfront researching options and making sure you get the best policy for you.
Vitality offers you some additional options to choose from to enhance your cover further.
Business Serious Illness Cover
Vitality's Business Serious Illness Cover protects the business against the financial implications of an employee, or key person, who suffers a severe illness while employed. There are some similarities to critical illness cover, but perhaps the most significant difference is that where the aforementioned pays out a set amount for various illnesses regardless of their severity, Vitality's Business Serious Illness Cover gives you a severity-based payout that is proportionate to the condition. In Vitality's own words:
"Business Serious Illness Cover is more likely to payout than any other critical illness plan in the market."
Source: Vitality Guide To Business Protection Insurance
Vitality offers two options for Business Serious Illness Cover, their standard product, which includes cover for 138 conditions, and Plus, which increases that number to 167. Illnesses are graded A thru E for the standard product, with A-rated illnesses triggering a 100% policy payout and E rated 15%. Their Plus product goes a bit further, covering even more conditions, through to a severity rating of G, which would pay out only 5% of the policy benefit. Please click here to see their detailed PDF for a complete list of the conditions covered by both their Business Serious Illness Cover and their Plus version.
Disability Cover for Business
The next option you can choose to include is Disability Cover, which will give your business financial support if an employee is absent due to a temporary or longer-term disability. These added resources can also allow you to provide your employees with a bit of extra financial support at a time which will be extremely difficult for them and their families. You could even use the funds to help you adapt your workplace to enable your key employee to come back sooner rather than later.
Waiver of Premium
Finally, you can opt for Waiver of Premium on Incapacity to your keyman insurance plan. What that means is if the person who is insured cannot work due to illness or injury, Vitality will waive your premiums.
The Vitality Programme
Vitality is the insurer that rewards its members for living healthy and active lifestyles, and their keyman cover isn't excluded from that. If you choose their Optimiser, you can access discounted premiums based on your employee's health and activity levels.
Vitality rewards
Based on your monthly premiums, your employees will get one of two sets of Vitality benefits:
Vitality Select
For premiums of £45 per month or less, employees will receive access to various discounts and rewards at no extra cost. Examples of the benefits include a 10% discount at Expedia, 50% off at Cafe Nero and 40% off gym membership with select Vitality gym partners.
Vitality Plus
For premiums above £45 per month, employees will receive access to an extended range of discounts and rewards for an additional fee of £4.75 per month. In addition to the benefits of Select, Vitality Plus members enjoy further Expedia discounts, free tickets to Vue and Cineworld, and a discount on the Apple watch.
Vitality is a leading and highly recognisable insurer in the UK; they are hard to ignore with their bright pink livery. What's perhaps more interesting about this innovative insurer is their approach to health, life and business insurance, in that they actively encourage and reward their members for leading healthier lives. Of course, healthier customers should mean fewer claims, which means Vitality shares that benefit through a reduction in premiums and a variety of supplementary benefits.
Vitality reviews
While there aren't any reviews published focused explicitly on their keyman insurance, Vitality does collect reviews on Trustpilot, currently enjoying a "Trustscore" of 4.3 out of 5 based on over 22,000 reviews. We're sure that you'll agree that with the number of products, services and customers they have, to attract such a positive rating is an excellent indication of the commitment to quality the company has.
Our View
From a Key Person perspective, Vitality's offering is right up there with some of the best policies in the market. True to their innovative form, alongside their core product, they've created their own and arguably an improved form of critical illness cover, which they call Business Serious Illness Cover.
From a pricing perspective, Vitality is always competitive. They are unlikely to be the cheapest, owing to the quality of their products, but they are always in the right ballpark compared to similar offerings. Opting in to their optimiser programme is a great way to reduce your premiums and make a commitment to encourage a healthy lifestyle for your employee.
At Business Protection Hub, we have no hesitation in recommending Vitality's Keyman Insurance to customers and are pleased to award it a five-star rating.
By this point, you are likely thinking about how you can buy a policy from Vitality as quickly as possible, but please wait! Yes, Vitality is one of the leaders in the business protection market, but many others have equally good offerings which may well be a better fit or give you a better price. It's vital that you compare policies; you will, after all, have this cover for several years or more, so take the time to speak to an independent broker and get their specialist advice first - remember the service brokers provide is free!
Does Vitality provide other forms of business protection insurance?
Yes, Vitality also offers Relevant Life Insurance, Shareholder Protection Insurance and Business Loan Protection in addition to their Key Person Cover.
How much key person cover do I need?
The level of cover you require should be considered carefully and based on expected costs or losses you foresee by losing the key person. Typically insurers will say you should multiply the individual's salary by five to get a minimum, but in truth, that's a relatively meaningless number. Please spend some time thinking about the impact of losing that person from a financial perspective and the cost of replacing them.
Is key person insurance a benefit in kind?
No, as the policy isn't to the benefit of the employee, it's not considered a benefit in kind.
Who is the beneficiary of a keyman insurance policy?
The beneficiary of a keyman insurance policy is the business that owns and pays for the policy. With this, the premiums are usually tax-deductible.
