Key Man Insurance Australia

In most factories, shops, or offices across the country, you will come across notices proclaiming that the employer has taken out insurance cover to protect employees from accidents that occur at work. In some instances, you will find that a business has taken up key man income insurance cover. Essentially, this is a life, trauma, and disability policy that is taken out on the key person in any business. It usually pays benefits to the business for any losses that arise from the disability or death of a valuable key employee. The benefits are payable upon any of the following:

• Inability to work

• Disability because of illness or an accident

• The untimely death of an important person in the business.

Losing a key person could mean a massive disruption in business activities and operations. Their connections or talents could be crucial to your company, or the position they hold could be so vital that it would need to be filled almost immediately.

Key person protection through an income protection policy, critical illness, life assurance or a combination of the three policies could provide a cash injection (either as a flow of income or lump sum) to the business should a key individual die or suffer from serious illness. Our income protection policies allow your business to continue its trading operations at times of financial pressure and considerable uncertainty.

Among many other things, here are the primary needs that get covered:

• The loss of profits suffered by a business until a replacement for the person is found and is as effective as their predecessor.

• Pay for the often high costs of recruiting and training a replacement

• If the absence is as a result of critical illness and a return to work is uncertain, pay income to the absent individual and cater for the costs of a temporary replacement.

Determining Key Persons In a Business

If you are a business trying to identify who to include on your key man insurance policy, here is some advice we recommend you follow:

• Pinpoint the key individual by working out the portion of the business’ profits which they are directly responsible for or wouldn’t be achieved with their absence.

• Seek to establish which employees are missed most when they are sick or on vacation, whether there is a person who handles most or all your business’s clients or if there’s an individual whom you cannot deliver services or products without.

• Think about the time it would take you to get a replacement for crucial employees

• Think about the employees who possess skills that are in high demand or hard to find in the current marketplace (either via experience or through education).

Why Do I Need Key Person Insurance?

Key man insurance proceeds could be used in different ways depending on how a business intends to recover from the loss of a crucial individual. Here are some of the reasons why you need key person income protection insurance.

• It could be used to settle debts, especially secured business loans where a business would be at risk of losing important assets if the loans were defaulted on.

• If a business cannot continue operations with the absence of the key man, then the benefits of this policy could fund employee severance as well as liquidation procedures.

• The policy proceeds are often used in funding recruitment and training as well as the salary of the replacement. The proceeds could also fund employee transfers and extra incentives to aid you in finding a top calibre replacement.

• If the key man dies, their partner will most probably inherit their share or equity of the business. To have it back in your business, you will need to purchase it from them at the current market price.

• If the provision of your business’s services or goods is disrupted, key man insurance benefits could be spent to give customers incentives or discounts to compensate them with the hope that they will remain loyal to your business throughout the transition period.

Key man income protection insurance is essentially a way for any business to regain its footing and navigate the difficult times should it suffer the loss of a valuable employee.

Designed to Keep Your Business Running

Having key man insurance could make it easier for your business to get specific types of credit or financing from banks or infusions of capital from potential investors since it aids in reducing business risks. Should your company merge or go public, you might need to have some key person insurance on your top executives.

Taking out this kind of policy makes a clear statement to the employee about their importance to your business. This could strengthen your relationship with them and aid in retaining these key role players. You might also have the choice to offer part of the policy’s payout to the employee’s family.

• Monthly protection for the smooth operation of your business – When you take up this policy through our company, you are entitled to a monthly benefit that is usually paid into your desired account to aid in covering lost income because of the unavailability or absence of a valuable employee.

• Decide on your cover – Our key man insurance cover lets you choose when the cover should begin, how much of your company’s gross profit is covered or what percentage of your key employee’s salary is included.

• Choose what to do with the benefits – Our key man income protection policy guarantees monthly benefits for your business, so you do not have to worry about any kind of loss for your business. And what’s even more exciting is that you choose how you will use the monthly benefit, for instance, paying for existing expenses, training new staff or hiring a temporary employee.

• Customise the benefit – Your business can choose from a one-month or three-month waiting period, with a 12 month benefit period as well as monthly benefits of up to $50,000.

Call Us Today For All Your Insurance Requirements

Have you identified key employees whose expertise and knowledge you need to insure? Choosing the right insurance provider in Australia isn’t an easy task with a host of companies operating in the country. For an obligation-free, competitive quote, professional insurance advice or more information on how we can help you find the best Key Man Insurance solution, please contact one of our expert consultants today!