“Key Man” Insurance

Let’s play the ‘what if’ game.

What if something happened to you or a key member of your organisation? Would your business continue to operate? Could you still generate revenue? Would you know what to do or how to operate that special piece of machinery?

It takes years to build a successful business – but just seconds to end one

Keyman Insurance is an insurance policy taken out by your business to protect critically important personnel in the event of accident, illness or death. As an example cover could include;

• The sole proprietor or CEO of a business
• A senior business partner with important networking connections
• A high achieving salesperson who brings in significant revenue
• A technician or designer with specific knowledge that impacts on operational performance

There are two types of policies available. Revenue or Capital protection.

To calculate the level of cover & which type of policy is best, consider the following financial costs or requirements;

• Cost of paying off loans, especially those personally guaranteed by the key person.
• Rebuilding your income and revenue.
• Buying ownership of the company from the key person’s inheritors.
• Recruiting and training a new staff member or hiring a temporary replacement.
• Replacing lost goodwill and maintaining business capital.
• Paying benefits to the key persons beneficiaries.

Any other fees, lost clients, customers or revenue, damage to your business and other expenses.

Other considerations

• Your Key man insurance policy can cover disability or temporary inability to work, or death only.
• If the business has a buy/sell agreement in place. If a key person dies, this agreement automatically lets other partners acquire their portion of the business ownership. Some policies may require a buy/sell agreement, but most do not.
• There are some exclusions with policies only paying benefits in certain circumstances. For example, they may not pay for self-inflicted injuries or certain accidents.

For further information or to receive a no obligation FREE quote, please contact our financial planning team on 03 5833 3000 or email wealthadvisors@plus1group.com.au