When business owners think about key person insurance, the first name that usually comes to mind is the managing director, founder or majority shareholder. That makes sense; leaders carry a lot of responsibility and decision making. But in many small and medium sized businesses, the person you'd struggle without most isn't always the one with the most senior title.
It might be the sales manager who holds your strongest client relationships. It could be the operations lead who knows how everything actually works. It may be the technical specialist no one else can easily replace, or the finance person keeping cashflow and planning on track.
Impact, not job title. A key person is someone whose absence would create a real financial or operational hit to the business: slower revenue because client relationships sit with one person, stalled projects because specialist knowledge lives with one person, or harder new business because clients and suppliers trust a particular team member.
A useful test: if this person was away for a long stretch, what would get harder almost immediately? Would decisions slow down, would clients need reassurance, would the team feel stretched, would you have to pay for temporary cover or recruitment? The answers usually point straight to where the real value sits.
Yes, and often is. Customer confidence is built through relationships, so your key person could be whoever clients speak to every day: a senior adviser, account manager, or case manager. They don't need to own the business to carry serious trust and goodwill.
If clients regularly ask for someone by name, that's worth noticing. The same goes for anyone holding key relationships with introducers, suppliers or lenders. Their value isn't just the tasks they complete; it's the confidence they create around the business. That's why key person planning shouldn't stop at the leadership team.
Often, yes. Some employees are key because of what they know: a system, a regulated process, or a technical part of the business few others could pick up quickly. If that knowledge supports delivery, compliance or client service, it may matter more to continuity than the job title suggests.
This shows up most in businesses built around loyal, experienced people, where things run smoothly because they know what to do and who to speak to. That knowledge has real value, and it's worth protecting.
It provides financial support to the business, not a replacement for the person. If a covered individual dies or, depending on the policy, suffers a serious illness, the payout can help with recruitment, training, lost revenue, temporary cover or debt repayment, or simply buy time to make decisions carefully.
For most owners, that's the real value: buying a bit of cash flow time, to enable considered rather than knee jerk decisions to be made to maintain a robust business.
Try this instead: who helps our business run well, grow well and serve clients well? It's a more positive framing, and it usually gives a clearer answer, pointing you toward the people driving progress, protecting relationships and supporting the team.
When should key person cover be reviewed?
Needs change as the business develops. A review is worth doing if you've taken on new staff, grown turnover, added new services, changed ownership structure, taken out borrowing, won larger contracts, or become more reliant on certain individuals.
It's also worth revisiting if cover was set up years ago; the person who mattered most then may not be the person who matters most now. The goal is simply to make sure the protection reflects the business you're actually running today.
At BPS, we are experts in this field. We work with business owners and directors to help them understand where protection may support the people, structure and future of their company.
If you haven't reviewed your key person cover recently, or you're unsure who in your business should be considered, we can help you think it through clearly and practically.
Please note: The information contained within was correct at the time of publication but may be subject to change.
The right cover will depend on your business circumstances, policy terms and eligibility. BPS can help you understand the options available and what may be suitable for your needs.
