Key Person Insurance in Australia – What It Is & Why Your Business Might Need It

Introduction

What would happen to your business if your most valuable team member couldn’t work due to illness or worse? For many Australian businesses, success hinges on a few key people. If one of them is suddenly lost, the impact can be severe.

That’s where Key Person Insurance comes in. At Angelic Insurance, we help business owners protect their most valuable asset, the people driving their success by finding the right cover from leading insurers.

What Is Key Person Insurance?

Key Person Insurance is a life insurance or income protection policy taken out by a business on a critical team member. If that person dies, becomes permanently disabled, or suffers a serious illness, the policy pays out a lump sum or income benefit to the business.

This helps cover:

• Lost revenue
  
  

• Recruitment and training of a replacement
  
  

• Loan repayment protection
  
  

• Shareholder or partnership buyouts
  
  

• Business continuity planning
  
  

Who Is Considered a “Key Person”?

• Founders or directors

• Lead revenue generators or rainmakers

• Specialists with unique skills or qualifications

• Key client relationship holders

• Business partners

If their absence would hurt your business financially, they’re likely a candidate for this cover.

What Can Key Person Cover Include?

✅ Life insurance (death or terminal illness)
✅ Total and Permanent Disability (TPD)
✅ Trauma cover for critical illness
✅ Income protection (for salary continuity in extended absence)

Coverage and definitions vary by insurer. Always check the Product Disclosure Statement (PDS).

Real-World Impact

A construction business loses its co-owner who secured most client contracts.
A design firm’s creative lead is diagnosed with cancer and must take 18 months off.
A medical clinic loses its only registered GP, halting operations.

Without Key Person cover, the financial shock could be unmanageable.

Tax Considerations

Key Person Insurance can be structured for:

🔹 Revenue protection – to replace lost profit (may be tax-deductible)
🔹 Capital protection – to repay debts or fund shareholder buyout (usually not tax-deductible)

Speak to a tax adviser for accurate treatment. Angelic Insurance helps you structure the cover correctly for your needs.

Why Use a Broker Like Angelic Insurance?

✅ We help assess your business’s key-person risk
✅ We compare policies across multiple insurers
✅ We help tailor the right structure—revenue or capital protection
✅ We guide you through claims and reviews as your business grows

We're here to simplify the process so you can focus on what matters: running your business.

Start Protecting Your Team Today

Your people are your greatest asset. Key Person Insurance helps ensure your business can continue even if the unexpected happens. Let Angelic Insurance help you put the right plan in place.

Important Notice & Disclaimer

The content provided on this page is for general information purposes only and does not constitute personal financial product advice. Angelic Insurance Pty Ltd and its authorised brokers do not provide personal advice, and the information on this website has been prepared without taking into account your individual objectives, financial situation, or needs. Before making any decision, you should assess whether the information is appropriate for your circumstances and consider seeking professional advice. Insurance products referenced on this website are subject to eligibility criteria, underwriting assessment, availability, and the terms and conditions of the respective product issuers. Angelic Insurance does not guarantee acceptance of cover or the ongoing availability of any product, nor does it make any representation regarding the suitability or performance of any third-party product. While every effort is made to ensure the information provided is accurate and up to date, details may change without notice, and no warranty is given as to the accuracy, reliability, or completeness of the content. Angelic Insurance and its brokers accept no liability for any loss, damage, or inconvenience arising from the use of, or reliance on, the information provided. All trademarks, product names, logos, and intellectual property referred to on this website remain the property of their respective owners. Angelic Insurance does not claim ownership of third-party content unless expressly stated. If you are the owner of any referenced material and have concerns about its use, or if you require information about the rightful content owner, please contact compliance@angelicinsurance.com.au.Use of this website signifies your understanding and acceptance of this disclaimer