As a small or medium business owner, you will understand the importance of making sure you and other key persons within your business are fit and healthy and are able to run your business, particularly in the early days.
Unfortunately, things do not always go to plan and you may find yourself in a situation where a key member of your team is no longer able to continue in the business.
At xLife, we specialise in helping small business owners protect their business. Make sure your small or medium business has the level of cover it needs and is protected with a Keyman Revenue Protection Policy so if you or another key staff member are not there for an extended period of time, the business can still function.
Our Revenue Protection guide will take you through:
- Keyperson Definition
- What insurance types are available for Revenue Protection?
- How much income protection do I need?
- Keyperson Insurance Tax Treatment
- Ownership and Beneficiary
- Keyman Insurance Quotes
- Keyperson Reviews
Keyman Policy Meaning – Definition
Keyman Insurance is designed to protect a small to medium business if a keyperson within the business is no longer able to continue working in the business due to death, total and permanent disability, critical illness or sickness or accident.
There are generally three types of Keyman insurance available:
Keyman Revenue Protection
Keyman Revenue Protection can protect your small business from lost revenue as a result of a Keyperson in your business no longer being able to play a part in the business due to death, critical illness, total and permanent disablement or total disablement.
Revenue Protection can generally cover:
– Wages or salary cost of hiring replacement
– Loss of revenue as a result of the key person exiting the business
– Loss of revenue due to business down time
What insurance types can I take out as part of Keyman Revenue Protection?
Generally a small or medium business is able to take out a key person insurance policy for:
– Death (Life Insurance)
– Critical Illness (Trauma Insurance)
– Total and Permanent Disablement
How much keyman insurance do I need? Assessing lost income
It can sometimes be difficult to quantify the exact loss of revenue and the exact amount of revenue protection your small business might need as a result of a keyperson exiting the business.
While in some cases, working out the wages or salary of an interim replacement or locum or the cost of re-hiring may be easy, assessing the overall loss of revenue can be difficult.
It is therefore always important to make sure you understand the nature of the business, in particular:
– Number of staff and their roles
– Structure of the business
– The impact the loss of a key person could have on the business
– The roles, duties and skills of key people within the business
– How the business generates income
– Any other types of key person insurance
Keyman Insurance Tax Treatment – Revenue Protection
The premiums for keyman insurance which is designed to protect against the loss of revenue are generally tax deductible, while any benefit the business receives is generally tax assessable.
Please note it is always best to consult with a tax accountant before making any decisions.
Ownership and beneficiary
Generally, when an insurance policy is business in nature and is designed to protect the business, then the business itself will be the policy owner and in most cases the beneficiary.
Keyman Insurance Quotes
We have access to the leading Keyman insurance providers in Australia, allowing us to compare quotes to find you the best possible cover for your small business.
Our advisers are experts in dealing with Keyman insurance and will be able to assist you no matter what your circumstances are.
Businesses can change from year to year, sometimes quite rapidly. Expansion can result in more staff being hired, more office space and more revenue being created.
Conversely, a business can often down size, shed staff, reduce office space and have a reduction in revenue.
It is always important to make sure you continually review your Key Person Revenue Protection insurance from year to year to make sure it is still relevant, especially if your business has gone through significant change from year to year.
Our staff are happy to conduct annual policy reviews, or review your policy as required.
If you are a business owner and would like more information on Keyperson Revenue Protection or if you would like to compare your existing policy, contact xLife today on 1300 135 205.