Benefits of Key Person Insurance

What is key person insurance?

A key person insurance policy is owned by an organisation to insure a key member of their business/company. In the event that their insured key person in the organisation suffers a critical illness, is permanently disabled or dies, the policy will provide a lump sum benefit.

Who needs key person insurance?

Key person insurance protects a company from the loss of a key person within the organisation. These are the people who are central to the running of the business. In a small business, this could be for example the founders or the company partners. For large organisations the loss of a key person can often mean profitability is affected, and therefore this insurance helps cover this loss.

Both small and large companies can consider key person insurance to protect their business interests.

How does it differ from individual life insurance?

A key person insurance policy is owned by an organisation to insure a key member of their business/company.

Key person insurance specifically refers to the way a life insurance, total and permanent disability (TPD) or trauma insurance ownership is structured. The basic definitions and benefits provided are the same as policies owned by the individual, with the main difference being the purpose the insurance is to be used for and that the policy is owned by the company, who typically employs the key person.