Key Person Insurance
Having key man or woman insurance in place can keep your company running during difficult times. Protect your company from the financial consequences of your most important employees' critical illness, terminal illness, or death.
What is Key Person insurance?
Key person insurance is a type of business insurance that a company can buy and be the beneficiary of. It is intended to give the company cash if an owner, a senior executive, or another important person dies or suffers a severe illness that is critical to the company’s ability to make money.
The impact of Key Person illness or death
A small-to-medium enterprise (SME) will be significantly impacted by poor health or the death of a key person, including:
- Serious financial consequences
- Inability to replace specialised knowledge
- Training, company culture, and “know-how” are all being lost.
- Loss of credit
- Competitors profiting from your company’s intellectual property loss
- Costs associated with attracting and retaining a replacement employee
How does Key person insurance work?
For key person insurance, a business usually buys a life, trauma, or income protection insurance policy on a specific employee or employee, pays the premiums, and is the policy’s beneficiary. The insurance policy benefit is paid to the company as revenue or business income, not capital.
Who is a key person?
A key person is someone whose death, critical illness, or disability would significantly affect the company’s cash flow. In any given business, at least one person (or more) can be regarded as a “key” and should be protected by a keyman insurance policy.
A key individual is often somebody whose abilities, expertise, and/or knowledge significantly increase the company’s income and profitability. That could comprise:
- Business owners or business partners
- Executive leadership team members
- Top salespeople
What does key person insurance cover?
Key person insurance gives you options and space to deal with unpleasant financial and personal situations in your business.
When something happens to you or your company’s key employees, the effect on the business will be significantly lessened due to the financial cushion provided by adequate key man insurance.
Key Person Insurance Providers
We have access to the leading insurance providers in the market, which allows us to recommend the most suitable policies based on your individual circumstances.
The beneficiary of a key person insurance policy is the nominated policy beneficiary, normally the company that pays the insurance premiums.
Because key person insurance protects your company from the financial impact of losing a key employee (including owners/managers) whose death or illness would significantly impact the company’s financial position and livelihood. The insurance proceed are paid to the company and can be used to finance the operational costs, or recruiting for another key staff member.