Does Key Man Insurance Cover Pre-existing Conditions?

By Olivia Johnson - Trusted UK Business Expert

Last Updated 20th of March 2025

3 minute read

If you’re considering key man insurance, understanding coverage details is essential, especially when it comes to pre-existing conditions. Let’s explore whether key man insurance cover Pre-existing Conditions and how it can impact your business. 

Key man insurance typically does not cover pre-existing conditions directly. Insurers may apply additional underwriting or exclusions for any health conditions identified before the policy starts, but some policies may allow coverage with higher premiums. 

While pre-existing conditions can complicate key man insurance, understanding how insurers assess these risks can help you secure coverage that still protects your business effectively. Keep reading to see what steps to take and how to approach your application. 

Protect your business with the right coverage! Learn if Key Man Insurance can cover pre-existing conditions and how to secure the best policy for your team. Click below to learn more. 

Will Key Man Insurance Cover Pre-existing Conditions? 

Key man insurance can be a vital component of business continuity, helping to protect against the financial loss that might occur if a key individual in the company dies or becomes incapacitated. But when considering coverage, the topic of pre-existing conditions often arises, leading to questions about how they impact eligibility and cost. Pre-existing conditions refer to any health issues that an insured person had before applying for coverage. Common examples include chronic illnesses, past surgeries, or any condition for which they’ve received medical treatment. 

In most cases, key man insurance policies are issued after an underwriting process, which is a thorough evaluation of the proposed insured person’s health. Here, insurers usually examine medical history, any known conditions, and potentially require additional medical exams. If a key person has pre-existing conditions, this can lead to the following outcomes: 

• Exclusions in Coverage: Many insurers may include exclusions in the policy, meaning specific conditions won’t be covered. For example, if the key person has diabetes, the policy may exclude any claims related to that condition. 
• Higher Premiums: Another approach insurers might take is increasing the policy premium to offset the higher risk posed by the pre-existing condition. While this can make the coverage more costly, it may still provide some level of protection for the business. 
• Limitations on Payouts: In some cases, insurers may limit the benefit amounts or enforce a waiting period before full coverage takes effect. 

Ultimately, while key man insurance can still be issued for someone with a pre-existing condition, the terms and costs of the policy are often adjusted to reflect the additional risks. This doesn’t mean that securing key man insurance is impossible; it simply requires a strategic approach and sometimes specialised advice from an insurance expert. 

How Do Insurers Assess Pre-existing Conditions? 

Insurers assess risk levels carefully, and pre-existing conditions can play a major role in determining a key man insurance policy’s specifics. They generally rely on two main components during the underwriting process: 

• Medical History Review: Insurers examine the key person’s medical history to understand the severity of any condition. For example, a controlled health issue with a good prognosis may not lead to as severe restrictions as an uncontrolled or progressive disease. 
• Actuarial Tables and Risk Ratings: Using data and actuarial science, insurers rate the risk associated with various health conditions. They may assign a risk rating that translates into adjusted premiums or added policy restrictions. 

For certain pre-existing conditions, insurers might request more details from healthcare providers or mandate additional health checks to gauge the stability and impact of the condition on the insured’s life expectancy and performance. 

What Options Exist if Key Man Insurance Won’t Cover Pre-existing Conditions? 

If pre-existing conditions significantly impact the cost or availability of coverage, businesses may explore alternative ways to protect against the loss of a key individual. Here are a few options: 

• Self-insurance: Companies may opt to set aside funds in case a key person becomes unavailable, ensuring financial security without relying on an insurance policy. 
• Alternative Policies: Some insurance types, like general life or critical illness insurance, may provide partial protection, although they aren’t tailored specifically for business needs. 
• Higher-Deductible Policies: A higher deductible can sometimes allow for lower premiums, though it means the company takes on more of the initial risk. 

Interested in finding the right policy for your business’s needs? Contact us today to see which key man insurance options best suit your situation. 

FAQ 

Can a key man insurance policy be issued if the key person has cancer?

Most insurers will consider issuing a policy but may apply exclusions or increased premiums for conditions like cancer. 

How can I know if a pre-existing condition will increase my policy premium?

An insurance provider typically determines this during the underwriting process based on the specifics of the condition. 

Is there a waiting period for pre-existing conditions in key man insurance?

Some policies may apply a waiting period before full benefits are available, especially if the condition could impact the key person’s life expectancy or business role. 

Ready to explore your options? Reach out to our team today to find a key man insurance plan that supports your business while addressing any unique health considerations. 

By providing comprehensive details about pre-existing conditions and key man insurance, this guide ensures business owners understand their options, helping them make the best decision for long-term business security.