Key Person Insurance

How would your business survive without you?

Insuring your company’s assets is extremely important, but have you considered:

• insuring the people and skills that make your company work?
• how your company would 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 sufficient 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?

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 is suited to businesses with a partnership arrangement of an individual who has guaranteed a loan essential to the stability of the business. In the event of the death of a Partner, the business should have the ability to continue operating.

There are two types of Key Person insurance:

1. Revenue protection
   • Replace potential loss of income
   • Loss would be reflected in the company’s “Profit and Loss” statement
   • Premiums may be tax deductible and proceeds are assessable for income tax
2. Capital protection
   • Replace loss of capital or repayment of debt and/or loss of goodwill
   • Loss would be reflected in the company’s “Balance Sheet”
   • Premiums are non deductible and proceeds are usually not assessable for tax (exception is Trauma cover).

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