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Key Person Insurance

What Is Key Person Insurance?
The simple way of describing Key Person insurance cover is like Life Insurance on a business. The need for Key Person Insurance is crucial a time like this. There are many business owners in New Zealand that suffer financially once a Key Person or executive in their business is sick, disabled or injured. The sudden loss of a key person or executive would have a huge impact on the company’s operations and future.

Why Do I need Key Person Insurance?
Key Person Insurance provides a payout on the unexpected death of the executive. It eventually buys the company time to find a new person or to implement other strategies to save the business. This cover will pay out an agreed benefit for up to 12 months. This helps keep your business running without major interruption in a devastating time. Often the survival of the business would be at stake if a key person is unable to work or generate revenue for the business. Having Key person cover in place means that the business may continue on operating and you can put in place the appropriate person and measures to keep it running. From the payout, the business can use the benefit (money) in any way it chooses.

What are the Benefits?
The core benefit of this cover is companies may use the insurance pay out for expenses until it can find a replacement person, or, if necessary, pay off debts, distribute money to investors, pay severance to employees and close the business down in an orderly manner. In a tragic situation, key person insurance gives the company some options other than immediate bankruptcy. If the company is a sole proprietorship and employs just you and no other employees or has no other people who depend on it, then key person insurance isn’t as necessary. How much key person insurance do you need? That depends on your business, but in general, you should get as much as you can afford.

When can I get it?
Key Peron Cover is suitable for small to medium size business and partnerships. Generally, for most insurance providers, the entry age is 17 to 59 years old and the cover ceases at the age of 65. This is a ‘agreed benefit’ contract which means you would not need any financial evidence at claim time.

How can I get it?
To get Key Person Insurance or you want to review your current cover, just contact Assetwise and we would you through the process and provide you with the best cover that best fits your current situation.