A key person can be anyone who is pivotal to your business. For example, it could be the owners, shareholders, a star salesperson or senior team members.
What is key person insurance?
Key person insurance can help protect your business if a key person in your team were to fall ill, become injured or die.
Employees and team members are one of the most significant assets for businesses in New Zealand. Key people in your company, such as the owners, shareholders, a star salesperson, or a specialist, may be essential to your business’s operations. If their input, skills and connections are vital to your business’s income and growth, you might want to consider a key person insurance policy.
Key person insurance can cover the loss of a key person in your business. With monthly and lump sum income options available , the cover can be used to mitigate potential revenue shortfalls and expenses caused by their absence, such as hiring a contractor during this time. It can provide options to help your business manage your key person’s absence and could help you retain the position until they’re able to return.
Key person insurance options
selected option
- What’s covered?
- What’s not covered?
Key person insurance example
Keith owns a construction business 50/50 with his business partner, Anne. Although Keith employs ten people – plus contractors when they’re busy – Keith is still very hands-on with his business. He organises his team, the rosters, and ongoing and upcoming jobs. He also has an in-depth knowledge of his industry and is training an apprentice.
When Keith gets diagnosed with bowel cancer, he knows he’ll need to take a significant amount of time off work to recover – he won’t be able to run the business or train the apprentice. Because the company has key person insurance with both the lump sum and monthly payment options in place, Keith has peace of mind that Anne can hire an expert to help keep the business running and everyone employed while he recovers. The monthly payouts mean the business’s cash flow is stable while Anne finds a suitable person to cover Keith’s work, and it’ll help cover the cost to train and pay that person.
Keith knows that if he’s unable to return to work in the future, the lump sum payout will help ensure that the business he worked hard to create will continue to operate.
This case study is fictional and does not represent any real-life individuals, events, or organisations.
Why Marsh?
Why should you choose Marsh to arrange your insurance solutions?
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Frequently asked questions
When choosing your key person insurance policy, you can opt for monthly payments, a lump sum payment, or opt for both.
Monthly payouts mean you could receive a monthly sum for up to two years (up to agreed policy limits) while a key person is sick or injured. This is typically chosen to cover incidents where the key person is expected to return to work and can act as a financial cushion for the business while their key team member is away.
The lump sum payment option is often chosen to cover situations where the key person will not be able to return to work.
Our expert brokers can help you choose the right option for your business.
Key person insurance payouts could be put towards the cost of bringing in a replacement, or to cover some of the revenue that is lost as a result of the key person being away from the business.
LCPA 24/470
Marsh Limited (NZBN 9429040918792)(“Marsh”) arranges the insurance and is not the insurer. This page contains general information and does not take into account your individual objectives, financial situation or needs. For full details of the terms, conditions and limitations of the covers, refer to the specific policy wordings and/or Product Disclosure Statements available from Marsh on request. This publication is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. The information contained herein is based on sources we believe reliable, but we make no representation or warranty as to its accuracy. Marsh shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Marsh makes no representation or warranty concerning the application of policy wordings or the financial condition or solvency of insurers or re-insurers. Marsh makes no assurances regarding the availability, cost, or terms of insurance coverage.