Key Person Insurance
Protecting Your Most Valuable Asset — Your People
Some individuals are critical to the success and stability of your business. If a key team member becomes seriously ill, disabled, or passes away, the impact can be sudden and severe, both operationally and financially. Key Person Insurance provides a lump sum payment to help your business cover lost income, hire temporary support, or manage debt while you recover and rebuild.
What Does Key Person Insurance Typically Cover?
- A lump sum payment to the business if a key person Passes away
- Is diagnosed with a terminal illness
- Suffers a critical illness or trauma
- Is unable to work due to total and permanent disability
- Use of funds may include hiring or training a replacement
- Covering lost sales or revenue
- Servicing debt or investor commitments
- Stabilising business operations
Cover is usually taken out by the business on the life of the key individual, with the business named as the policy owner and beneficiary.
Who Is Considered a “Key Person”?
- Founders or directors
- Lead technical experts or engineers
- Top salespeople or client relationship managers
- Anyone whose absence would significantly affect revenue, strategy, or operations
Why Key Person Cover Matters
- 70% of NZ SMEs rely on one or two people to drive the business forward
- Replacing leadership, technical knowledge, or trusted relationships takes time
- Business continuity plans often overlook personal risk exposure
- Investors and lenders may require this type of cover to protect their stake
Related Cover to Consider
You might also need Shareholder Protection Insurance to support buy/sell agreements between business owners, Business Interruption Insurance for events that disrupt operations, and Trauma Insurance for personal cover if you’re the key person.