How Much Does Key Person Insurance Cost in the UK?
Last Updated 10th of May 2025
4 minute readKey person insurance can protect your business when someone important is gone. If you’re wondering what it will cost, you’re in the right place. We’ll guide you through everything you need to know.
The Key Person Insurance Cost in the UK ranges from £10 to £100+ per month depending on the person’s role, cover amount, age, health, and length of the policy. Costs vary widely but are tailored to each business and person insured.
The price can be low or high, but knowing the reasons why helps you plan. We’ll explain how insurers set costs and what affects your premium. Read on to make a smart choice for your business.
Curious about Key Person Insurance pricing? Discover the factors that affect cost and get a tailored quote. Get started below.
What Is the Key Person Insurance Cost in the UK?
Key person insurance is a special policy for businesses. It protects them when a key person—like a director or top salesperson—dies or cannot work. The money from the policy helps the business stay afloat, pay bills, and hire replacements.
But what does this kind of protection cost? Let’s look at how much you might pay and why.
The cost of key person insurance in the UK depends on many things. Some policies can be as low as £10 a month for young and healthy staff. Others, for older or higher-risk roles, can be £100 or more per month. The average tends to fall between £25 and £50 a month. But to know the exact cost, insurers look at a few key factors.
What Affects Key Person Insurance Cost in the UK?
Let’s break down the main things that change how much you pay:
- Age of the Key Person: The older the person, the higher the risk. Insurance companies charge more when the insured person is older, especially over 50. Example: A 30-year-old manager might cost £20/month. But a 55-year-old director might cost £75/month for the same cover.
- Health and Lifestyle: Smokers, those with health issues, or high-stress jobs often pay more. A healthy lifestyle means cheaper insurance. Tip: Quitting smoking can save money on your premium.
- Amount of Cover: The more money you want the policy to pay out, the more you’ll pay each month. You can choose cover from £50,000 to over £1 million.
| Cover Amount | Estimated Monthly Cost |
| £100,000 | £15–£30 |
| £250,000 | £30–£60 |
| £500,000+ | £50–£100+ |
- Length of the Policy: If you want cover for 5 years, it costs less than cover for 20 years. Pick a term that matches the key person’s value to your business.
- Job Role and Business Type: A key person in a high-pressure or risky job might cost more. Also, large businesses may need more cover than small ones.
How to Estimate Your Key Person Insurance Cost in the UK
You can use online calculators, but here’s a simple guide:
- Think of the loss: What would happen if the key person were gone?
- Estimate value: Are they making big sales? Managing teams? Replacing them may cost a lot.
- Pick cover: Choose how much you’d need to keep the business going.
- Get quotes: Ask 2–3 insurers to see who gives the best value.
“A good rule of thumb is 2–5x the key person’s annual salary,” says Claire Evans, a small business finance advisor in Leeds.
Is Key Person Insurance Worth the Cost?
Yes, especially if your business relies on one or two people to keep it running. Losing them could hurt sales, growth, or even cause closure.
Even if it feels like an extra cost now, the payout could save your business later. It gives peace of mind to you, your team, and investors.
Real-Life Example: Small Business Owner in Manchester
Emma owns a growing design agency. Her lead designer, Alex, brings in 60% of client work. She bought a £300,000 key person policy on Alex for £38 per month.
A year later, Alex had a serious illness and was unable to work. The payout helped Emma hire a freelancer and keep projects going. “It was the best decision I made,” she says.
How to Lower Your Key Person Insurance Cost in the UK
Want cheaper cover? Try these tips:
- Stay healthy – Get regular check-ups, avoid smoking.
- Pick a shorter term – Cover for 5–10 years costs less.
- Adjust the payout – Only insure the amount you truly need.
- Compare insurers – Not all providers charge the same.
Can I Claim Key Person Insurance as a Business Expense?
In many cases, yes. If the business owns the policy and benefits from it, HMRC may allow it as a tax-deductible expense.
However, tax rules are tricky. It’s best to speak to your accountant or HMRC for guidance.
Ready to protect your business? Click the link below to compare the best key person insurance quotes in the UK. It’s free and only takes a few minutes.
FAQ
Is key person insurance the same as life insurance?
No. Life insurance helps families. Key person insurance helps businesses.
Who can be insured under key person insurance?
Anyone important to the business’s success—owners, directors, sales leads.
Can a sole trader get key person insurance?
Yes, but it’s usually more useful for limited companies or partnerships.
What if the key person leaves the business?
You can cancel or change the policy to another key person.
How long does it take to get cover?
Most policies take 1–3 weeks after a health check and application.
This complete guide should give you confidence when looking into Key Person Insurance Cost in the UK. If you’re still unsure, talk to a broker or use a trusted online tool to help you decide what’s right for your team.