BUSINESS INSURANCE

Key person Insurance

 

Typically, the greatest asset to a business is the intellectual capital and personal effort by key people. Key person insurance is an asset protection for your business, recognising that the continued contribution of key people is critical to the long term success of any business.

 

Benefits are:

 

  • Repays debts to preserve the business assets. If your business has a bank loan, or if a mortgage on your home is funding the business then this type of insurance may be necessary.
  • Protects the owner’s personal interests.
  • Frees up cash flow for the business.
  • Maintains its credit standing if a business owner or a loan guarantor dies or is disabled.

 

Key person – Revenue protection

 

Almost every business has the computer, copier and car insured. Yet it’s important to recognise that these are not the most valuable asset to your business. Often, it is the contribution of key individuals which plays the greatest significance in generating business revenue.

 

Key person Revenue Protection can assist in:

 

  • Compensating for the loss of business revenue.
  • Pays the cost of finding and hiring a suitable replacement person.
  • Protects the business profits.
  • Maintains the value of the business as a going concern.
  • Will this be enough? We think you need 65% of your pre-retirement income to retire comfortably. The best place to start is to ask 'How much do I need?
  • The next step is to use our AMP super simulator to see how you're tracking and determine what strategies you can use to reach your goals.

 

Things to consider include:

 

  • Who is missed most when on holiday?
  • Would the business miss their contribution if sick or disabled? How long would it take to replace them, how could that be funded?

 

Methods of Calculating Keyperson Revenue Cover

 

Method 1

3 – 5 times the Key person’s Salary + Cost of finding, hiring, training and replacing the Keyperon = Maximum Insurable Amount

 

Method 2

Annual profit or revenue contributed by the Keyperson (maximum 3 times for revenue or 5 times for profit) + Cost of finding, hiring, training and replacing the Keyperson = Maximum Insurable Amount

 

Buy Sell insurance

 

What would happen to the ownership of your business if one partner suffered a disability, critical or terminal illness, or even died unexpectedly?

 

Would the remaining owners be in a financial position to buy out the departing owner’s share of the business? And how much should the departing owner or their estate receive?

 

Buy Sell insurance, together with a legal agreement outlining the transfer of control and ownership of the business, can protect all business owners by providing the necessary funds to buy out an owner’s share of the business should they suffer a disability, specified trauma or death.

 

Together, this insurance and transfer agreement is known as a Buy Sell agreement, or Buy Sell arrangement.

 

Finance Brokers

The Finance Brokers Association of Australia (FBAA) is a national association representing finance and mortgage loan writers throughout Australia.

AMP Financial Planner

AMP Accredited Financial Planners have been helping Australians by delivering the right balance of security and performance for over 160 years.

Tax Practitioners Board

The Tax Practitioners Board provides an overview of our continuing professional education requirements for tax agents, BAS agents and tax (financial) advisers

Australian Finance Group

AFG is now one of the largest providers of mortgage broking services in the country, offering more than 1,400 financial products from Australia’s leading lenders.

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