Key Person Insurance

In many small businesses, an employee or a partner can make or break its financial success. Running a venture without a key person’s support could lead to significant losses.

What Is Key Person Insurance?

It is a type of life insurance purchased by a company on behalf of an important (or key) executive. It is also known as business life insurance or key man/woman insurance. The company pays for the policy premiums and is the beneficiary.

This type of insurance helps business reduce the risk of disruption when paying death benefits that prove to be critical to the business’s overall operation. Key Person Insurance helps the business recover from losses and keep them afloat and productive.

Why Choose Absolute Insurance?

Absolute Insurance has been providing quality Key Person Insurance in Perth for more than two decades.

If you rely heavily on a partner or employee’s expertise, Key Person Insurance will cover disability and death of specific partners and employees. Your business will receive a lump sum that will include financial costs like loss of knowledge, training replacement costs, rebuilding clientele and debt related to the loss of the key partner or employee.

Key Person Insurance by Absolute Insurance allows partners to insure each other while ensuring a smooth and secure transfer of ownership to the surviving partner.

How Much Key Person Insurance Do I Need?

The amount of Key Person Insurance you need depends heavily on the scale and needs of your business. Generally, you can get as much Key Person Insurance as you see fit.

For example, if you run a restaurant, then you should opt to have a Key Person Insurance for your head chef. If the business is run by a partnership, then you should also have yourself and your partner insured to ensure than any sudden losses would not permanently paralyse the company.

Who Can Take Key Man Insurance?

Keyman Insurances are taken by business or companies since the entity is the beneficiary. The surviving employer or partner will be the one to process any claims regarding Keyman Insurances.

What does A Key Person Insurance Policy Pay For?

Keyman Insurances, like every other insurance policy, have varying factors that affect the cost of the premium. The type of policy purchased, the plan for the death benefit, and the employee’s or partner’s current health and lifestyle are deciding factors for the insurance premium.

Is Key Person Insurance Tax Deductible?

The cost of Key Person Insurance is often non-tax deductible. The monthly premiums will be paid after-tax dollars.

Usually, When the insured passes away, the business or company will receive the lump sum benefit free from income taxes.

As the insured employee, there are no tax implications for you since it is not considered part of your taxable income.

Key Person Insurance FAQs

What is key person insurance?

It is a type of life insurance purchased by a company on behalf of an important (or key) executive. It is also known as business life insurance or key man/woman insurance. The company pays for the policy premiums and is the beneficiary. 

Why is key person insurance necessary?

A key person insurance policy is only required if a company is likely to suffer from a severe economic downturn should the key executive die or become unable to work. It provides the company with sufficient financial support to ensure its protection and protect its future.

How helpful is key person insurance?

Key person insurance covers expenses associated with the replacement or temporary hiring of a person who will take the place of the executive. It can also be used to pay for business expenses including salaries, personal guarantees, and business loans. 

How do I apply for a key person insurance policy?

We only ask that you send us a quote request that includes some key details about you. We will then review the current offerings in the market,  choose the best options that fit your needs, then send you the proposal through email. Simply review the email and send us any queries and clarifications you may have. Once you have made up your mind, we can complete the application through a short phone call. This will be followed by an application review of the insurance company’s underwriter who may also request more information from you. 

Are there exclusions in the insurance policy?

Exclusions such as pre-existing conditions will depend on the insurance policy and insurer. We recommend reviewing the policy thoroughly and to ask your underwriter to clarify terms you do not understand.

Which insurance company offers key man insurance?

We will only recommend the products of major insurance companies so you are assured of reliable cover and protection when you need it most.