Key Person Insurance

How would your business survive without you?

How would your company cope if one of its key people were to die suddenly, or become unable to work due to illness or injury?

Would your company have enough cash reserves to fill the vacancy with a quality temp while you look for a full time replacement?  Would you be able to meet your customers’ orders, or would they need to move to a competitor to have their orders filled?

Insuring your company’s assets is extremely important, but it also important to consider insuring the people and skills that make your company work.

Key Person insurance protects businesses from the loss of individuals whose capital, knowledge, client base or experience are vital to the company. This can include a director, a specialised employee or a supplier.

Key Person insurance also suits businesses with a partnership arrangement of an individual who has guaranteed a loan essential to the stability of the business. If the guarantor becomes disabled or dies, Key Person insurance should provide a payout for that loan, so that the business is able to continue operating.

What are the types of Key Person insurance?

There are two types of Key Person insurance:

Revenue protection, which replaces potential loss of income.  The loss would be reflected in the company’s Profit and Loss statement. Premiums may be tax deductible and proceeds are assessable for income tax.

Capital protection, which replaces loss of capital or repayment of debt and/or loss of goodwill. The loss would be reflected in the company’s Balance Sheet.  Premiums are not tax deductible and proceeds are usually not assessable for tax (with the exception of Trauma insurance cover)

At Archimedes Financial Planning, we work closely with our SME Business Owners to find the right Key Person policy, given the business needs.

Do not leave it until something happens - contact us today for a no-obligation review of your personal insurances, and protect those dependent on you!

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Archimedes Clients are:

  • Professionals of any age
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