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Protect your business from the financial consequences of the loss of a keyperson

By Gavan Ryan | April 12, 2022

Key person cover will help your business recover financially from the loss of an important individual.
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“72% of businesses cease trading within 5 years of the death of the founder.”

This is an unpleasant statistic for business owners and shareholders. Businesses are aware of the need to protect their premises, purchase liability insurance, cyber and maybe even product recall. However, many businesses do not consider the importance of investing in coverage on their key personnel. In the unfortunate event of a loss of a key individual, what impact would this have on your business?

The losses of one of your Directors, an Owner or a Top Salesperson are just some of the events that may have a significant impact and may ultimately result in your business no longer being able to trade.

Keyperson cover will not remedy the loss of an important person to your business but it will provide you with the additional funds to enable your business to continue trading. These funds will provide you with the capability to:

  • Replace the key person
  • Replace profits generated by the key person
  • Repay loans called in by commercial lenders
  • Repay loans made by the key person to the business

Ultimately, key person cover will help your business recover financially from the loss of an important individual.

Who can be considered a key person?

Each business is different; typically, a key person is someone on whom the business depends for its continued success or existence. The death of this individual would usually result in loss of knowledge, experience, unique skills, relationships or management expertise. These individuals are not required to be owners or directors of the company and can also include project-based employees.

What types of cover are available and what are the tax implications?

It is vital that you receive guidance on this cover and WTW are there to help. We will be able to review the business and suggest where coverage could be applied and the levels that could be appropriate. The ultimate level of cover sought is up to the business but our team will be able to guide you through each step.

If your business has outstanding loans, investments or profits that would be impacted by the loss of one or more individuals then this cover is appropriate for you. Costs of cover depend on the amount sought and the health status of the individual but premiums are based on normal life insurance so costs can be manageable for significant benefits.

To discuss providing cover for your business, please contact your WTW Consultant or reach out to our Financial Planning Team directly.

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Keyperson Protection PDF .1 MB

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Manager – Financial Planing

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