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Key person critical illness insurance, for UK businesses
Key person critical illness insurance, or key man critical illness cover, pays the business a lump sum if someone it depends on is diagnosed with a specified serious illness, such as cancer, heart attack or stroke (ABI ↗).
Because it pays on the diagnosis, the business has money to hand while the person steps back to get well.
This guide covers what it covers, how much insurers will consider, the tax and the claims record.
Every claim here is our summary of a named external source, linked beside it. Sources change: check the wording at the link before you rely on it.
Source: ABI (ABI ↗)
What is key person critical illness insurance? Cover on a diagnosis
Key person critical illness insurance is the part of key person cover that pays on a serious illness: HMRC names critical illness in its description of key person cover (HMRC ↗).
The insurers we checked sell it alongside life cover, as the steps show: Legal & General (Legal & General ↗), Aviva (Aviva ↗) and LV= (LV= ↗) among them.
Owner
The company takes out the policy
Life cover with critical illness added at the outset, for an extra cost, on a key person with their agreement. The business owns it, pays for it and is paid by it.
Diagnosis
The key person is diagnosed
With a condition on the policy’s list, meeting its definition.
Payout
A lump sum goes to the business
While the key person is alive, to steady the business while they are away.
The ABI minimum standards and the core conditions
The ABI's Guide to Minimum Standards says that to be called critical illness insurance, a policy must cover cancer, heart attack and stroke to specified minimum definitions (ABI ↗).
The ABI says these three are the most common critical illnesses, accounting for 80% of claims against critical illness cover (ABI ↗).
The Guide also sets minimum definitions of further conditions that may or may not be included.
Insurers can leave any of them out, but where a policy includes one, it must use the model wording (ABI ↗).
So the list varies by policy: read the one you are offered.
Cancer Research UK estimates the lifetime risk of a cancer diagnosis at nearly 1 in 2 for people born in 1961 in the UK (Cancer Research UK ↗).
Must be covered, to minimum definitions
ABI Guide; check at the link: (ABI ↗)
Further conditions with ABI definitions, if included (examples)
- Multiple sclerosis, with persisting symptoms
- Kidney failure, requiring permanent dialysis
- Major organ transplant, from another donor
- Parkinson’s disease, resulting in permanent symptoms
Headings from the ABI Guide's further conditions chapter; check at the link: (ABI ↗)
Critical illness multiples, lower than life
Insurers size critical illness cover on a lower multiple than life cover.
Royal London gives up to 10 times gross salary for life cover and up to 5 times for critical illness (Royal London ↗).
Scottish Widows gives up to 10 times earnings for life, with a lower figure, typically up to 5 times, for critical illness (Scottish Widows ↗).
Zurich's 2021 guide gives perhaps up to 7 times remuneration for life and 5 times for critical illness (Zurich ↗), and on profit, up to 5 times for life and 3 times for critical illness (Zurich ↗).
Legal & General gives up to 10 times earnings for life cover and says only that a lower figure is considered for critical illness (Legal & General ↗).
Flip the switch to see the published ceilings move.
Published multiples, life cover vs critical illness
Each insurer's published ceiling, not a recommendation; underwriting decides. Sources: Royal London (Royal London ↗), Scottish Widows (Scottish Widows ↗), Zurich (Zurich ↗) (Zurich ↗) (a 2021 guide), Legal & General (Legal & General ↗).
Key person life vs critical illness cover
Life cover pays if the key person passes away.
Critical illness cover pays on a diagnosis that meets the policy's definition.
The table sets the published terms side by side.
Published terms, not what any business will be offered. Insurers revise them; check each at its link.
Maximum critical illness cover insurers publish
Separate from the multiples, insurers publish an overall ceiling for critical illness cover, shown here.
Legal & General's depends on the illness definition the policy uses (Legal & General ↗).
Legal & General (Legal & General ↗)
Legal & General (Legal & General ↗)
Royal London (Royal London ↗)
Aviva (Aviva ↗)
How much does key person critical illness cover cost?
No insurer publishes a price list for key person cover, so this page shows no premium.
Legal & General describes critical illness cover as chosen at the outset for an extra cost (Legal & General ↗).
The steps show what goes into a price.
The person
Who is being insured
The insurer underwrites the key person from the application, including their health.
The amount
How much cover
Sized on a lower multiple than life cover. Larger amounts can mean more financial evidence.
The definitions
Which conditions, on which wording
The core three, plus whichever further conditions the policy includes.
The term
How long it runs
How many years the business wants the cover in place.
Is key person critical illness tax deductible?
It can be.
HMRC names critical illness in its description of key person cover (HMRC ↗), and the conditions for a deduction are compared here (HMRC ↗).
Whether they are met is a question of fact (HMRC ↗), so check your own case with your accountant.
Critical illness claims, by the numbers
The ABI's 2024 figures, and Scottish Widows' own, are shown here (ABI ↗) (Scottish Widows ↗).
Not meeting the policy definitions is one common reason a claim is declined (ABI ↗), so with critical illness, read the definitions before you buy.
ABI; check at the link: (ABI ↗)
ABI; check at the link: (ABI ↗)
Scottish Widows; check at the link: (Scottish Widows ↗)
Compare key person critical illness cover
Critical illness is one part of protecting a business.
Each guide below says who the policy pays and what it is for.
- Pays the business, as life cover
Key person life insurance
The life cover that critical illness is added to: ownership, sizing, tax and claims.
Read the guide → - Compare the insurers
Key person insurance comparison
How the UK insurers’ published limits and terms line up.
Read the guide → - What drives the price
Key person insurance cost
What goes into a key person premium, and why this site shows no price list.
Read the guide → - Pays the business, monthly
Executive income protection
For time off sick: a monthly benefit paid to the company, not a lump sum.
Read the guide → - The whole picture
Business protection insurance
Key person, shareholder, relevant life and income protection side by side.
Read the guide → - Before you insure
Key person risk
How to spot and reduce dependence on one person, and where insurance fits.
Read the guide →
Who each pays, from the insurers' own descriptions: key person cover (Legal & General ↗), executive income protection (Legal & General ↗).
Check it for yourself
Every claim on this page is our summary of one of the documents listed here.
We last checked them against the live sources on 28 September 2026.
The documents are the authority, not this page.
Insurers and HMRC update them, so validate any figure or condition at its link before you rely on it.
- ABI Guide to Minimum Standards for Critical Illness Cover ↗The three core conditions and the further minimum definitions
- Association of British Insurers ↗2024 protection and critical illness claims figures
- Legal & General key person insurance ↗Critical illness if chosen at the outset, for an extra cost
- Legal & General key person protection (adviser) ↗Maximum cover and entry ages
- Legal & General adviser guide ↗Life cover multiple, and a lower figure for critical illness
- Royal London key person guidance ↗Salary multiples for life and critical illness
- Royal London business protection guide ↗Maximum critical illness cover
- Scottish Widows key person calculator ↗Earnings multiples for life and critical illness
- Zurich intermediary guide (November 2021) ↗Remuneration and profit multiples for critical illness
- Aviva business protection ↗Life or life and critical illness; entry ages; evidence
- HMRC Business Income Manual, BIM45525 ↗Key person cover, deductible premiums and payouts
- Cancer Research UK ↗Lifetime risk of a cancer diagnosis
Key person critical illness insurance, answered
Not financial advice. This page is general information. Before buying insurance, the FCA tells consumers to check the firm on its Firm Checker (FCA ↗). For free guidance, see MoneyHelper.