Business Protection Bulletin – April 2011

01 Apr 2011

How would the long term absence of a Key Person affect your cash flow and profitability?

To suddenly lose a key member of staff for a long term due to an accident or illness, especially for smaller businesses, could have a dramatic effect on cash flow and profitability.

Key Person Income Protection cover can pay a regular monthly amount to the company should a key individual become unable to work due to an accident or illness.

Benefit Example

Mr Smith is the Sales Manager for J & J Limited, a small company co owned and managed by joint Directors, Mr Jones and Mr Johnson. Mr Smith is the only full time employee.

Mr Smith is unfortunately diagnosed with cancer and is off work for 9 months as a result. Having put Key Person Income Protection cover in place to cover Mr Smith the business claimed and received a monthly payment, after the four week waiting period had expired, for the remaining 8 months. The benefit can be used by the business in any way it chooses e.g. to fund a replacement employee or sick pay or to help cover the reduction in sales income and profit.

In this instance the cover also provided Mr Smith with access to an external care advisory company who offered him access to qualified nurses to assist in regaining his strength aiding his recovery back to work. In addition the advisory company helped to provide recruitment solutions to J & J Limited and provided a list of potential candidates within 48 hours. It also provided advice on all aspects of employment law relating to the claim including managing the absence.

Tax position on Premiums and Benefit

Tax relief should be available on the premiums subject to certain criteria being met, with any benefit received by the business being subject to tax as a trading receipt. 

Our Service

ü Wingate will discuss your business circumstances with you to ensure we identify your specific business needs.

ü Based on this research we will provide you with a report confirming the options available and our recommendations.

ü We will implement any policies you wish to put into place, including managing the underwriting process with the insurers on your behalf.  

Wingate Benefits Solutions is here to assist you with all aspects of business protection and employee benefits. Should you wish to discuss this or any other such matter please contact your Wingate Benefit Solutions adviser on 0844 406 0027.


Tax and legislation are liable to change. This information is based on Wingate Benefits Solutions’ current understanding of UK law and HM Revenue & Customs practice and legislation. No guarantees are given regarding the effectiveness of any arrangements entered into on the basis of the information contained herewith. It is recommended that professional advice is sought prior to entering into any financial arrangement.

Other Articles

Share This Article


Would you like more detail on how we could add value to your employee benefit proposition?

Employee Benefit Benchmarking Report 2022

Exclusively focused on UK organisations with employee headcounts of up to 1000, the data and conclusions shared in this report are directly relevant to companies of this size and profile.