Key Person Insurance

What is Key Person Insurance?

Key person insurance (aka key man insurance or keyman protection) is much like your standard life insurance policies with the main difference usually being that the owner of the policy is a company instead of the life insured.

What are the benefits of a key person insurance policy?

The reason the company might want to own such a policy is because the life insured is considered to be a ‘key person’ in their business. If anything were to happen to that person the company may want to make sure that they have the financials required to ensure business proceeds as desired.

Key person cover provides peace of mind and options when accidents or injuries otherwise could cause serious consequences for the company, sometimes even fatal.

How does key person cover work?

Usually the company may want business to proceed as normal and need the money to help things keep running. Other desired outcomes may include intentional sale of the business to a partner or third party as without the key person the business may no longer be wanted.

It’s important to sit down and decide what outcomes everybody wants to occur in certain situations, long before they occur. This way you can be confident of the future of both the business and the lives of those involved. Once you know your desired outcomes, you can start calculating how much cover you need to ensure those outcomes.

Is key man insurance tax deductible?

The short and annoying answer is, it depends. You’ll need to comb through the details of your situation and desired outcomes before making any conclusions, but generally speaking tax deductibility is relative to income/revenue generating purposes as opposed to capital purposes.

This means keyman cover usually has deductible and non-deductible components as its ownership and the various kinds of policies by their nature, fall under a mixture of these purposes.

Key man insurance policy

Figuring out if you want to take out small business insurance such as key person cover can be tricky as there are countless options and strategies to choose from.

We’re happy to help however we can, so feel free to give us a call and chat about even your simple enquiries or concerns on 07 3205 5001, or click here to send an email enquiry.

If you’re interested in reading some more about Life insurance, check out ASIC’s great site about all money matters linked here.

Russell Van Homrigh Financial Services and Russell Van Homrigh are Authorised Representatives of Synchon AFS Licence 243313.