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Key Person Insurance

Key Person Insurance provides business's with protection should a key person, such a director suddenly be unable to work or pass away.

No one likes thinking about how they or their family will be affected in the event of a serious illness or accident, or even worse, if it is fatal. For business owners, the stakes are higher – not only do you have to assess how the domestic finances will be maintained, but also whether you or your family will be able to cover the business’ costs.

Marsh Advantage Insurance can arrange insurances such as key person, income protection, life and total permanent disablement (TPD), and trauma insurance that can provide peace of mind for you and your family in the event of accident, illness or death.

Key Person

Key Person Insurance is effectively insurance on the ‘key person’ in a business. These are the people who are crucial to a business, the ones whose absence would financially impact the company. A company purchases an insurance policy on its key employee(s), pays the premiums and is the beneficiary of the policy. If that person unexpectedly dies, is totally and permanently disabled or suffers a critical health event the company receives the insurance  payment which can be used for expenses until the company can find a replacement person, or, if necessary, pay off debts or distribute money to investors.

Key Person Insurance provides a funding mechanism with insurance cover for Life ,Total and Permanent Disablement, Trauma / Critical Illness insurance and in some cases Salary continuance.

The potential loss of revenue and depreciation of business valuation at the death or permanent disability of a key person is an often overlooked and unquantified risk on a balance sheet.  Key Person Life Insurance can be used to provide indemnification to the company for this potential liability. Insurance company underwriters routinely allow for a multiple of ten times a key person’s total compensation package in key person indemnification. Higher limits are possible subject to financial justification. 

The typical key person indemnification package has typically a ten year protection period, covering the time period before a liquidity event. Coverage can be cancelled at any time, and because it is a temporary policy, the premium is very low relative to the indemnification level.


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Marsh Advantage Insurance Pty Ltd (ABN 31 081 358 303, AFSL 238369) (“MAI”) arrange this insurance and is not the insurer. The Discretionary Trust Arrangement is issued by the Trustee, JLT Group Services Pty Ltd (ABN 26 004 485 214, AFSL 417964) (“JGS”). JGS is part of the Marsh group of companies. Any advice in relation to the Discretionary Trust Arrangement is provided by JLT Risk Solutions Pty Ltd (ABN 69 009 098 864, AFSL 226 827) which is a related entity of MAI. The cover provided by the Discretionary Trust Arrangement is subject to the Trustee’s discretion and/or the relevant policy terms, conditions and exclusions. This website contains general information, does not take into account your individual objectives, financial situation or needs and may not suit your personal circumstances. For full details of the terms, conditions and limitations of the covers and before making any decision about whether to acquire a product, refer to the specific policy wordings and/or Product Disclosure Statements available from Marsh Advantage Insurance on request.