A ‘key person’ is someone who’s continued association with a business provides that business with a significant and direct economic gain. Economic gain means more than just profits. It can, amongst other things, also include cost savings, capital injections, goodwill, access to credit and access to customers.
The owners of a business will usually be key people. Key people can also include:
Managing director
Sales manager
Financial controller
Computer programmer
Specialist engineer
Famous actor
Working director
Silent partner
Most businesses take out insurance cover for assets that do not actively make them profits – their plant, equipment vehicles and buildings. It is the human asset that, through initiative, drive, skill, specialist knowledge and ingenuity which, can actively generate profit from your business.
Key person insurance can compensate the business for loss of two different qualities:
business profitability (revenue purpose), and
the capital value of the business (capital purpose)
Note: The type of policy used can impact on the taxation treatment of the premiums and proceeds.
For more information or to make an appointment with an adviser to discuss your specific business needs contact us on (07) 3286 1322 or email us.
We regularly provide information seminars and networking sessions for local businesses and business people.
All of our seminars are hosted in our office boardroom, and refreshments are provided.
