Key Person Insurance

Who is a keyperson?

A keyperson is a business owner or employee whom are critical to the ongoing revenue and profitability of the business. The keypersons typically have a direct impact on company earnings or whose expertise and talents are crucial to the continuity or growth of the business.

What is keyperson insurance?

It is a simple, cost effective and flexible solution in the event of a potentially devastating event in your business.

There are two types of keyperson policies. One is to protect the business cashflow, while the other is to protect business capital.

Keyperson revenue

This policy can ensure that your business continues to operate by compensating your business for loss of revenue following the disability or death of the insured person. The sum insured can also include the costs of finding and hiring a suitable successor in terms of experience, ability and education possibly from overseas.

Keyperson capital

This policy can help to pay out any loans or debts of your business following the disability or death of the insured in the business. A number of people can usually be insured under the one policy.

Ownership structure

We can assist clients to construct a keyperson policy so as to ensure that the ideal amounts of insurance are established for the business along with correct ownership structures. Depending upon the purpose of the keyperson policy (ie. revenue or capital), then we will discuss how the policy should be owned.

Taxation

Generally, for keyperson revenue policies, the premium may be tax deductible to the company (IT155). It may also be assessable at the time of benefit paid to the business (IT 155). You should refer to your accountant for tax clarification.

The benefits:

Offset a drop in your business revenue Provide your business with the time and resources to find a suitable replacement Continue with your business plans without significant interruption Provide capital to repay loans Protect your business from a forced sale