How should key person level term assurance be arranged for directors of KPL Ltd?

When arranging key person level term assurance for directors of KPL Ltd, taking out a separate policy for each director on a life of another basis is the most suitable option. This approach allows the company to specifically cover each individual director as a key person whose loss could significantly impact the business's operations and financial stability.

Each director plays a crucial role in leadership and decision-making, and their absence could lead to inefficiencies or even financial losses for the company. By having individual policies, KPL Ltd can tailor the coverage amount according to the criticality of each director's role and their contribution to the company's success. This method also ensures that the benefits payout is specifically tied to the loss of each individual, which is vital in a situation where one director's skills and influence are more critical than another's.

In contrast, having one group policy on all directors may not adequately reflect the varying levels of risk associated with each individual. Additionally, a single policy for the company could lead to complications in claims and distributions. As for not having any insurance, this option overlooks the significant financial protection that key person insurance can provide in the event of an unexpected loss. Hence, taking individual policies on a life of another basis offers the most comprehensive and protective strategy for KPL