Key Person

Every business has key employees or owners who make a valuable contribution to the business – based on their expertise, knowledge, client connections and experience. This added value contributes to the profitability of the business and its success. The temporary or permanent loss of these employees can result in financial hardship for a business. This can take the form of:

  • Loss revenue and profits
  • The loss of a specific skill set
  • Decline in the value of the business e.g. reduction in goodwill

What is Key Person Insurance?

Key person insurance enables a business to have an insurance policy on a key person so the business can protect itself against this type of loss. The proceeds from the policy enable the business to be compensated for the loss e.g. hire a temporary replacement or to payout the loans owned by a partner to the business.

Key Issues to Consider

There are a number of issues Financial Life addresses when recommending a key person policy:

  • Identifying the key people to be covered
  • Recommending the types of cover
  • Recommending the amount of cover
  • Whether the cover should be for capital or revenue purposes – this determines whether the premiums are tax deductible and any proceeds assessable
  • Identifying the appropriate insurance policies
  • Ensuring correct ownership of the policy

Financial Life has access to a large number of different policies and insurers and can put in place the appropriate key person cover for your needs.

To find out more about key person insurance and how it could protect your business please phone Adam Stewart on (07) 4639 1268.

Financial Life Pty Ltd (ACN 107614415) is an authorised representative of AMP Financial Planning Pty Limited, Australian Financial Services Licensee


Any general advice in this information does not take account of your personal objectives, financial situation and needs. Read the relevant Product Disclosure Statement before acquiring any product mentioned on this website.

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