What is Key Person Insurance?
Key person insurance is an insurance policy a business can take out on its most valuable employees - and yes, that includes you.
It helps safeguard your business if one of its biggest assets dies, gets very sick or becomes disabled.
Take a moment to ask yourself: If you (or another key person in your business) were to fall seriously ill or die, how would your business suffer? Could you continue operating?
Would sales/revenue take a hit? Would you need to hire someone else - possibly a senior or specialist individual - to step into that person’s shoes? How would you cover wages, overheads and debts if operations are interrupted or stop altogether?
Types of Key Person Insurance:
Business Life Insurance
Business Life Insurance pays out a lump sum if a key person in your business (including you) dies or is diagnosed with a terminal illness.
It offers a cash injection to help the business navigate this challenging period, ensuring your business has the necessary funds to weather the storm and continue trading, or perhaps wind up or sell the business.
It's not uncommon for spouses/family members to inherit a majority shareholder's stake in the business when they die. In this event, Business Life Insurance funds can be used for a shareholder buyout.
Income Protection Insurance
If you’re a one man band, you might want to consider Income Protection Insurance for yourself. This insurance can even include specific Mortgage Repayment cover, too.
Business Trauma Insurance
Business Trauma Insurance provides financial support (in a lump sum) if a key person is not able to do their job due to a severe illness like cancer, stroke, heart attack etc.
Disability Insurance
Business Disability Insurance covers the loss of income when a key employee (which could be you) becomes disabled and is unable to work. It pays out a monthly amount until the key person is back in the business, helping protect your revenue stream.
Benefits of Key Person Insurance:
Financial Stability - Key Person Insurance provides financial support in the event of the untimely death, illness or disability of a crucial member of your team - yourself included.
Income Replacement - Provides funds to replace lost income/revenue streams.
Business Continuity - Helps maintain operations, ensuring your business can continue to function and pay its bills during a transitional time (for example, while a suitable replacement is found and trained).
Cover for Medical Support - Key Person Insurance can cover costs associated with treatment and rehabilitation.
Shareholder Buyout - Key Person Insurance can cover a shareholder buyout, in the event a majority shareholder’s spouse/family member inherits their stake in the business. This avoids being forced into co-ownership with a new person and eliminates pressure on the business to liquidate assets to pay out the estate.
Support While Selling/Shutting Down - Helps with the expenses involved in selling or winding up the business, if that’s necessary.
Creditor Assurance - Having Key Person Insurance in place offers reassurance to investors and lenders.
Tax Deductibility - Key Person Insurance premiums are generally tax deductible, helping to reduce the overall cost.
Big or Small Businesses - Key Person Insurance is valuable for businesses of all sizes and structures, and we work with everyone from tradies, freelancers, contractors and other one-man-bands through to company directors who have multiple senior assets.
Reducing ACC Cover Premiums - Having the right Key Person Insurance can reduce your reliance on ACC and allow you to opt for a lower level of ACC cover - delivering cost savings while still maintaining the appropriate protection. (We can help you evaluate your needs to ensure a suitable balance of coverage.)
Don’t leave to chance what
you’ve worked so hard to build .
Whether you’re a sole trader or you’ve built a big team, we can talk you through the options and help you decide what cover you need to protect your livelihood.
We’ll make complex policies easy to understand,
and ultimately help you protect what
you’ve worked so hard for.
Tax-deductible protection
I meet many business owners - especially sole traders - who’ve structured their insurance cover under their personal name to safeguard their own financial security.
However, some insurance cover can actually be structured as a business expense - because some of the personal risks you’re trying to cover can be classified as business risks rather than strictly personal risks. After all, if you get sick and can’t run things, that’s a huge risk for your business, right?
Re-structuring insurance into the correct business entities can allow some of the insurance premium to become a tax deductible expense, lowering your tax.
Always seek advice from your accountant or tax professional.
Meet Craig
With over a decade of experience as an Insurance Broker, I focus on life, health, and disability insurance for both wage earners and self-employed individuals.
I have a passion for helping small business owners because - being one myself - I understand the dedication and hard work it takes to build something from the ground up. I also know how much more’s at stake for self-employed people when illness or death strikes. Without the right protection,
a business can be lost in an instant.
That's why I specialise in providing Key Person Insurance. It ensures self-employed people are protected, so they can keep their businesses running even in the face of life’s challenges.
I’ll help you assess what level of protection you need, talk you through the options, and simplify the complex world of policies and applications for you.
Whether you’re a tradie, a solopreneur, or managing a team of staff, I can help!
Let’s Chat!
Simply fill in the form on this page and we’ll get back to you within 24 hours.
Or if you’d rather chat now, you can contact Craig on
027 667 2537 or Freephone 0800 672 537
Or jump in and book a spot in Craig’s calendar:
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We’re based in Tauranga, Bay of Plenty but we help clients right across New Zealand via online meetings / video calls.
Key Person
Insurance is for:
All Business Types
Sole Traders through to Company Directors
Tradies
Contractors + Freelancers
Husband and Wife Business Owners
Business owners with no employees
Business owners with multiple employees