Do you have Key People that are critical to your business?

Is their continued involvement critical for ongoing success, revenue and profitability? If so have you considered the impact on your business should an unexpected health event stop a Key Person from working for a prolonged period?

Click here to download the Key Person Protection brochure.

The impact from the loss of a Key Person

  • Loss of technical expertise
  • Damage to the goodwill of the business
  • Stop the momentum and growth of the business
  • Loss of confidence in the business by creditors
  • Loss of clients
  • Time and money lost in replacing the Key Person
  • Immediate reduction in profitability and sales

What is Key Person Insurance?

Most business owners insure tangible business assets such as buildings, equipment, stock and vehicles, however more often than not they ignore the businesses most important assets; its key people.

Key Person Insurance is an insurance policy over the lives of the people critical to the ongoing success or viability of the business. This protects the ability of the business to meet its commitments, continue in business and most importantly continue to generate profits for its shareholders.

Why is Key Person Insurance Important?

Key Person Insurance is designed to protect the business against the financial loss suffered from losing a Key Person. It allows a business to reinvest in itself; providing stability and confidence at a time of great uncertainty.

Who is a Key Person?

A Key Person is someone who provides the ideas, drive, initiative and skills that turn capital investment and business assets into profit.

Key people can include:

  • Business Founders and Principals
  • Managing Directors
  • Financial Controllers
  • Key Sales staff
  • Key Technical Specialists
  • Key Investors

Tax implications of Key Person Protection

Taxation can have a substantial impact on the premiums and proceeds of Key Person insurance policies. Some premiums are tax deductible, others are not.

Proceeds from a claim may be received tax free, while in other circumstances the proceeds are received as assessible income and attract the full company tax rate. Furthermore, Capital Gains Tax (CGT) may sometimes apply to policy proceeds.

Why do you need advice on Key Person Protection?

The issue of taxation with Key Person insurance can be complex and finding the best solution to protect your business from the loss of revenue, debts and director personal guarantees requires carefully considered planning.

Specialist Advice Services can help you develop a strategy to best handle the loss of a Key Person by identifying the risks your business may be exposed to and planning ahead to protect all stakeholders.