Business Key Person Cover
It is important to insure anyone who is a key revenue producer in a business. Key Person Cover can be arranged on any person that is key to the ongoing success of a business, whether an owner or an employee.
Key Person insurance involves insurance coverage for Total and Permanent Disability (TPD) and Life Cover policy on the life of the key person. This coverage protects the business by providing a lump sum to replace the revenue generated by the key person in the event that he /she is prematurely deceased or permanently unable to work.
The Key Person lump sum payment when claimed replaces the revenue that would otherwise have been generated from the key person’s business activity and enables the business finances to pass through this period of immense difficulty unscathed.
It also means that as the business finances are intact, the key person’s share of the business is still a saleable asset with a valuation unchanged by the drop in revenue due to the key person coverage. This situation provides the business owner(s) with the option to sell the former key person’s share of the business to an in-coming producer.