Who owns key person insurance? The business does: it applies for the policy, owns it, usually pays the premiums and is the one paid if a claim succeeds. The key employee is only the life assured, the person whose death or illness the policy is about.

Naming the owner and payee on a new policy? Both are worth going through with an FCA-authorised broker, whose call-back costs nothing and starts from the form on this page.

Which party holds each role on a key person policy?

Legal & General's key person web page states the arrangement in one line: "The policy is owned and paid for by the employer, so any pay-out is payable to the employer." Three roles are involved, and on a standard company policy they sit with two parties:

  • Owner. The company. It signs the application through an authorised person, pays and decides on changes to the cover.
  • Life assured. The key person. They give health and personal details and are not a party to the contract.
  • Beneficiary. Whoever the insurer pays on a valid claim. With no assignment and no trust, that is the owner.

Aviva's Business Protection Term Assurance Cover Details (EDCO1589 0126) put the beneficiary point this way: the business as owner is the beneficiary "unless they chose to assign the cover or place it in trust". The same document names the owner of the cover and Aviva Life & Pensions UK Limited as the parties to the contract, and says the owner of the cover can reduce the sum assured or the term at any time, within Aviva's minimum limits.

The key person is still involved at the start. Legal & General's key person page says a business can take out the policy "with the agreement of the person who is being covered", and its technical guide for advisers says "The key person will have to complete their personal and medical details and also sign the application as the life insured." Aviva also requires the business to have an insurable interest in the person covered at the time the policy is taken out.

Why the business is owner and payee is covered in what key person insurance is for, which also explains how the sum is set. How the cover differs from a policy that pays an employee's family is in key person vs relevant life.

Does the owner change for a partnership or an LLP?

It can. Legal & General's technical guide says a company is a legal person that can own a policy, but that for a partnership in England, Wales and Northern Ireland: "It is the partners and not the partnership itself which will own any policy." A partner could take out a policy on their own life and place it in trust for the other partners, and the trustees would then be paid. The same guide adds that Scottish partnerships are treated differently: there the partnership has its own legal identity and can be the applicant. It says a limited liability partnership may own a policy directly.

So the owner follows the legal form of the business: the company, the LLP, a Scottish partnership, or the individual partners elsewhere in the UK.

When would a key person policy be put in trust?

For a company, often not. Royal London's guidance for financial advisers describes a policy with the company as owner and the key person as the person covered, then says: "In this case there’s no need to use a trust. Instead, the company owns the plan, pays the premiums and receives the proceeds."

In the partner arrangement above the money is meant for the other partners rather than for a company, which is where a trust comes in. Aviva's Cover Details say that if cover is under trust it pays the trustees, who must then distribute the money to the chosen beneficiaries under the terms of the trust. Trusts built for owners buying each other's shares belong to shareholder protection, covered in what shareholder protection insurance is, and the general mechanics are in our guide to life insurance trusts.

Deciding if a trust suits a given business, owner or partnership falls to a solicitor or tax adviser. Trusts on business policies are worth raising with whoever phones you from the form on this page.

Who owns the policy after the key person leaves?

The policy belongs to the business, so it does not leave with the employee, but whether the cover carries on depends on the insurer, and Aviva and Legal & General treat a leaver differently.

Aviva ends the cover. Its Cover Details say "We need to be told if the person covered, as a key person or in connection with a business loan, leaves the business as we’ll cancel the cover from that point." Its list of cases where it will not pay includes the person covered leaving the business before a claim is payable. A move to a different role inside the same business is not the trigger: Aviva says it does not need to be told about that.

Legal & General's technical guide, written for financial advisers rather than customers, lists choices instead. If a key person leaves or retires before the term ends, the business could stop paying the premiums, in which case the policy lapses, keep paying to the end of the term so that a claim would still pay the business a capital sum, or assign the policy to the key person, who becomes the legal owner and could carry on paying. Where a partner is the key person and the policy is in trust, it says the policy would automatically revert to that partner.

Which of these a business has depends on the insurer and the policy wording, so check it before the policy starts. Whether the premiums stay tax-deductible after someone leaves is a separate question, covered in whether key person insurance is tax deductible. Whoever calls you from the form on this page can be asked what a particular insurer does when someone leaves.

What does assigning the policy to the key person involve?

Assignment is a legal transfer of the policy from the business to someone else. Aviva's Cover Details say that where the owner has told Aviva by deed of assignment to pay someone else, it pays that assignee, who must send the original deed before a claim can be paid. Legal & General's guide describes assigning to the key person as making them the legal owner.

After an assignment the roles change: the key person is both owner and life assured, and a claim is paid to the assignee, so the business no longer receives the money.

Tax may follow. Legal & General's guide says "The taxation of this can be complicated, for both the company and the life insured. National Insurance, Capital Gains Tax may all need consideration." HMRC's Insurance Policyholder Taxation Manual (IPTM7385, read 26 October 2026) says that an assignment between a company and an employee is in general likely to be for money or money's worth rather than a gift, and that where the policy is assigned to the employee there may be personal tax implications, though not under the chargeable event regime. That is HMRC's general guidance, not tax advice for any one business.

What to settle with the key person before the policy starts

A short conversation avoids surprises later. Points worth settling before anyone signs:

  • who the owner is: the company, the LLP, or a partner for a partnership in England, Wales or Northern Ireland;
  • who is named as the payee on a claim, and whether an assignment or trust is intended;
  • what the insurer does if the person leaves or retires, since Aviva cancels the cover while Legal & General's adviser guide lists lapsing, paying on or assigning;
  • whether the key person has agreed, and how the insurer handles their health details (Aviva, for one, does not pass them to the owner without the person's permission).

Whoever rings from the form on this page can check these points against your own business.

Frequently asked questions

Can the business see the key person's medical information?

Aviva's Cover Details say information given by the person covered is confidential and will not be shared with the owner without their permission. They also say the person covered and the owner must give full, honest and accurate answers.

Who signs the application when a company is the owner?

Legal & General's technical guide says "Usually the Company Secretary, Chief Executive, General Manager or a Director will sign for and on behalf of the company." The key person signs separately as the life assured.

What if a sole trader who owns the policy dies?

Aviva's Cover Details say it will normally pay the owner's personal representatives, who need to send the original Grant of Representation, Letters of Administration or Confirmation before a claim can be paid. If the cover was assigned or placed in trust, it pays the assignee or the trustees instead.

Is the beneficiary of key man insurance always the business?

Not always. The business is the beneficiary unless it assigned the cover or placed it in trust, as in Aviva's terms. With a partnership in England, Wales or Northern Ireland, the payee under Legal & General's guide is the trustees.

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