Key person insurance cost, and what decides it
Key person insurance cost depends on who is insured and how much cover the business needs.
No insurer we checked publishes a key person price, so this guide shows only published examples we could verify, each with its assumptions and source, and what the insurers and MoneyHelper say decides the premium.
It covers key man insurance cost too: keyman is the older name for the same cover.
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.
- Premium examples only where a named source publishes them, with every assumption stated
- What sets the price, in the sources' own words
- How insurers cap the cover, which drives the price
- No prices of our own: we are not an insurer and do not quote
Key person insurance costs, the key facts
A key person policy is priced on one person.
MoneyHelper says premiums depend on the product, how long you take it out for, age, whether you smoke or have smoked, lifestyle, health and job (MoneyHelper ↗).
Aviva says the insurer might ask for a medical exam (Aviva ↗).
That is why nobody can show your real price without underwriting.
What you can know in advance is the size of the cover, and the calculator works that out from the insurers' published rules.
- No insurer we checked (Legal & General, Aviva, Royal London, Scottish Widows, LV=) publishes a key person premium example. The only one we found is a broker's.
- In that broker's example, £150,000 of level cover over 10 years cost £7.26 a month for life cover at 35, and £158.57 for life and critical illness at 55 (Drewberry (broker) ↗).
- Aviva: “The more coverage you need, the higher your premium will be.” (Aviva ↗)
- Insurers publish ceilings of up to 10 times earnings for key person life cover (Legal & General ↗) (Royal London ↗) (Scottish Widows ↗).
- Premiums are deductible only if the sole purpose is meeting a loss of trading income (HMRC ↗), and life cover must be term insurance with no other benefits (HMRC ↗).
Key person insurance cost at a glance, from a published example
The only key person premium table we could verify comes from a broker, Drewberry, not an insurer.
It uses premiums from its own online quote engine and states its assumptions: a healthy non-smoker, a company director with office-based duties, £150,000 of cover, level cover that won't reduce, over the next 10 years.
The quotes are accurate as of August 2025, and no insurer is named (Drewberry (broker) ↗).
It is an example for one set of assumptions, not a quote for you.
Change the person, the amount or the term and the price changes.
Drewberry's published table, as printed: £150,000 of level cover, 10-year term, healthy non-smoking company director with office-based duties, quotes accurate as of August 2025. A broker's example, not an insurer's price; check it at the link: (Drewberry (broker) ↗)
Key man insurance rates and premiums: why there is no rate card
A search for key man insurance rates suggests a published price per £1,000 of cover.
No insurer we checked (Legal & General, Aviva, Royal London, Scottish Widows, LV=) publishes one for key person cover, and we found no average key person premium from a primary source.
MoneyHelper's guide to the cost of protection lists what premiums depend on but gives no price (MoneyHelper ↗).
The premium is built for each person.
Aviva describes a base premium set by age, health and lifestyle, plus any add-ons and administrative costs (Aviva ↗).
An average across people of different ages and health, on different cover amounts and terms, would tell you little about the premium for your own key person.
So this page shows only what is published, each with its assumptions.
What affects key person insurance cost, in the sources' words
MoneyHelper, the government-backed guidance service, says there is no one size fits all and that monthly payments, also known as premiums, depend on a number of factors (MoneyHelper ↗).
Its list is written for personal protection insurance; a key person policy is priced on the same person.
The cards give each factor as the source puts it.
None of them comes with a number: the insurer applies them to the person in front of it.
Younger usually costs less
Aviva: “Younger people usually pay less because they are less likely to make early claims.” (Aviva ↗)
Habits and hobbies count
Aviva: “Activities like smoking or dangerous hobbies can increase your premiums.” (Aviva ↗)
History, weight, family
MoneyHelper lists current health, weight and family medical history (MoneyHelper ↗). Aviva says the insurer might ask for a medical exam (Aviva ↗).
More cover, higher premium
Aviva: “The more coverage you need, the higher your premium will be.” (Aviva ↗)
The role, and the extras
MoneyHelper: “some professions are higher risk than others”, and any add-ons you include (MoneyHelper ↗).
Size the cover first, then price it
The cover amount drives the price.
Aviva: “The more coverage you need, the higher your premium will be.” (Aviva ↗) Drewberry, a broker, says “the biggest influence on the cost of Key Person Insurance is first and foremost the size of your benefit” (Drewberry (broker) ↗).
Insurers cap the cover by what the person is worth to the business.
Scottish Widows sets it at a maximum based on either their remuneration or the loss of profits attributable to them (Scottish Widows ↗).
On profit, Legal & General lists up to 2 times attributable gross profit (Legal & General ↗) or up to 5 times attributable net profit (Legal & General ↗), and Royal London's normal multiple is 5 times net profit (Royal London ↗).
Cover can also be the loan to be repaid if the key person passes away (Legal & General ↗).
Type your own figures.
The result is each insurer's published ceiling, not a quote and not a price.
Salary, regular bonuses and dividends; insurers word it differently
Their share of the business's net profit, averaged over recent years
Their share of gross profit
Business borrowing that would need repaying
£420,000 to £600,000
Across 4 published rules that apply to the figures you gave. Each is a ceiling, not a recommendation: the insurer's underwriter sets the real limit.
Add a net or gross profit figure above to see this method.
Add a loan figure above to see this method.
No premium is shown: the price depends on the person and needs an insurer's underwriting. Nothing you type is stored or sent.
How age affects key person insurance premiums
In the broker's key person example, life-only cover rose from £7.26 a month at 35 to £26.78 at 55, for the same £150,000 over 10 years (Drewberry (broker) ↗).
Legal & General shows the same effect from the other side: what £25 a month buys in its personal life insurance, by age at the start, based on its 2025 customer averages (Legal & General ↗).
It is personal cover, not a key person policy, but it is the clearest published picture of how age changes what a premium buys.
Legal & General personal life insurance: non-smokers in good overall health, £25 a month, 25-year policy (19 years at 70, the maximum), quotes taken 13 March 2026. Not key person cover; check it at the link: (Legal & General ↗)
Key person insurance cost by cover type: life vs critical illness
Adding critical illness is the biggest single change in the broker's example: at 35 the premium went from £7.26 to £32.56 a month, and at 55 from £26.78 to £158.57 (Drewberry (broker) ↗).
No insurer we checked publishes the difference.
No source we checked publishes a key person income protection price, only how much it can pay, shown on its card.
Pays a lump sum
Legal & General describes key person protection as life insurance on a key person, owned and paid for by the employer, so any payout goes to the employer (Legal & General ↗).
Key person life insurance →Pays on diagnosis too
A policy called critical illness must cover cancer, heart attack and stroke to the ABI's minimum definitions (ABI ↗).
Key person critical illness →Pays monthly
Legal & General's Key Person Income Protection pays the business a monthly benefit while the employee cannot work (Legal & General ↗): up to 2.5 times their earnings or 75% of attributable gross profit, at most £20,833 a month (Legal & General ↗).
Key person income protection →Guaranteed or reviewable key man insurance premiums
A premium can be fixed for the life of the policy or reviewed.
On Legal & General's Key Person Protection, premiums are “Guaranteed, unless increasing cover is chosen”, with a choice of guaranteed or reviewable when critical illness cover is added (Legal & General ↗).
Its policy summary explains the difference.
Guaranteed premiums “stay the same unless you make changes to your policy”.
With reviewable premiums, it checks every five years from the fifth anniversary whether the premiums are enough to keep the cover at the level chosen, and says: “Your state of health or individual circumstances won't be a factor at the review.” (Legal & General ↗)
No source we checked publishes how the starting price of a guaranteed premium compares with a reviewable one.
When you compare quotes, compare the same premium type.
One insurer's documents, summarised; other insurers set their own terms. Check the wording at each link.
Level or decreasing cover: does it change the cost?
Legal & General's Business Life Insurance policy summary, which names Key Person Protection and Business Loan Protection among its uses, describes three shapes of cover.
Level cover stays the same unless you change it.
Decreasing cover reduces during the policy and “is often used to help protect a business loan or commercial mortgage”.
Increasing cover rises with inflation on each policy anniversary (Legal & General ↗).
On its adviser page for key person cover, Legal & General lists level and increasing cover, and increasing cover means the premium is not guaranteed (Legal & General ↗).
No source we checked publishes a price comparison between level and decreasing key person cover.
If the cover is meant to repay a loan, ask for quotes on both shapes.
A dash means the documents we hold say nothing on that point. Other insurers set their own terms.
Key man insurance vs life insurance cost
Key person life cover is life insurance on the key person, but the employer owns it, pays for it and receives any payout (Legal & General ↗).
The price is set on the same factors either way, so what changes is who pays, who is paid and the tax, listed here (MoneyHelper ↗).
We found no source that prices the two side by side for the same person, and the two published examples on this page are different products.
- Same price factors. Age, health, smoking, lifestyle, job and the term (MoneyHelper ↗).
- Different owner. The employer owns and pays for key person cover (Legal & General ↗).
- Different payee. The payout goes to the employer (Legal & General ↗); the company receives the proceeds (Royal London ↗).
- Different sizing. Cover is capped by the person's remuneration or the profits attributable to them (Scottish Widows ↗).
- Different tax. A company can deduct premiums only if the sole purpose is meeting a loss of trading income (HMRC ↗) and life cover is term insurance with no other benefits (HMRC ↗). A sole trader's cover on their own life is not an allowable deduction (HMRC ↗).
Best keyman insurance UK on cost: who is cheapest?
We don't rank insurers or name the cheapest.
None we checked publishes a key person price, and each prices the person in front of it, so the insurer that is cheapest for one director may not be for another.
Only quotes for the same person, on the same terms, can be compared.
Price is not the only difference.
The ABI reported that insurers paid 97.9% of new individual protection claims in 2024 (ABI ↗), and insurers publish different sizing rules and maximums.
Before any sale, the firm must specify your demands and needs (FCA ↗), and the FCA tells consumers to check the firm on its Firm Checker (FCA ↗).
Cover amount
The same sum insured
More cover, higher premium, so compare quotes for the same amount.
Term
The same length of cover
How long you take it out for is one of the things premiums depend on.
Cover type
Life only, or life with critical illness
Adding critical illness changes the price the most in the published example.
Premium type
Guaranteed or reviewable
Compare guaranteed with guaranteed, and reviewable with reviewable.
Disclosure
The same full answers
Non-disclosure of existing medical conditions is a common reason claims are declined.
How to reduce key person insurance cost
The levers are the ones the sources name.
Cover amount: more cover, higher premium (Aviva ↗).
Term: HMRC says a deductible life policy's term should not extend beyond the employee's usefulness to the company (HMRC ↗).
Cover type: critical illness multiplied the premium in the broker's example (Drewberry (broker) ↗).
Cheap cover that does not pay out is no saving.
The ABI reported that insurers paid 97.9% of new individual protection claims in 2024, and named not disclosing existing medical conditions as a common reason for declined claims (ABI ↗).
Before you buy, the FCA tells consumers to check the firm on its Firm Checker (FCA ↗).
Cover amount
Size the cover to the loss
Work out what the business would lose, then ask for that. Insurers cap the cover by the person’s pay or the profit they bring.
Term
Match the term to their usefulness
A life policy meant to be deductible should not run beyond the person’s usefulness to the company. A shorter term is a different price.
Cover type
Decide on critical illness deliberately
It pays in more situations and costs more. Price life-only and life with critical illness side by side.
Disclosure
Answer the application fully
Non-disclosure of existing medical conditions is a common reason claims are declined.
Who you buy through
Check the firm first
Use the FCA Firm Checker before you buy through a broker or adviser.
Is key person insurance tax deductible?
HMRC sets two conditions.
The sole purpose of the insurance must be meeting a loss of trading income, not a capital loss (HMRC ↗), and a life policy must be term insurance with no other benefits (HMRC ↗).
Whether the sole-purpose condition is met is a question of fact (HMRC ↗).
If the premiums were deducted, a payout is trading income (HMRC ↗).
Tax treatment depends on your facts, so check it with your accountant.
Summarised from HMRC's Business Income Manual; check each row at its link.
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.
- MoneyHelper: the cost of protection insurance ↗What premiums depend on, from the government-backed service
- Aviva: how life insurance premiums are calculated ↗Age, health, lifestyle, policy type and cover amount
- Legal & General life insurance ↗What £25 a month buys by age (personal cover, 13 March 2026)
- Drewberry (broker): keyman insurance cost ↗A broker’s key person premium table, August 2025. Not an insurer
- Legal & General Key Person Protection (adviser) ↗Guaranteed or reviewable premiums; level or increasing cover
- Legal & General Business Life Insurance policy summary ↗Reviewable premiums, level and decreasing cover (2026/01)
- Legal & General key person insurance ↗Owned and paid for by the employer, which receives any payout
- HMRC Business Income Manual, BIM45525 ↗When key person premiums are deductible
- Legal & General adviser guide ↗Sizing key person cover: earnings, profit and loan methods
- Royal London technical guidance ↗Who is a key person; salary and profit multiples
- Scottish Widows key person calculator ↗Their published earnings multiples
- Zurich intermediary guide ↗Key person protection (November 2021 guide)
- Association of British Insurers ↗Critical illness minimum standards and 2024 claims figures
- FCA Firm Checker ↗Check a broker or adviser is authorised before you buy
Key person insurance cost, FAQs
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.