Key Person Insurance
Key Person Insurance is designed to provide a capital injection into the business upon the Total Long Term Disability, Total and Permanent Disability, Terminal Illness or Death of a key employee or sole trader of the business.
We’ll pay a claim, if during the cover term, the life assured:
- suffers a Total Long Term Disability; or
- suffers a Total and Permanent Disability; or
- is diagnosed with a terminal illness; or
- dies the key person’s employment with the business ends as a result.
Any employee who makes a significant contribution to profits is likely to be a key person – for example a key salesperson or a technical expert, as well as company directors and executives.
Loss of Revenue Cover and Variable Loss of Revenue Cover each provide an agreed monthly revenue replacement benefit when a key employee or sole trader is disabled, either totally or partially.
We’ll pay the Total Disability Benefit and Partial Disability Benefit in advance following the end of the selected waiting period.
Because a person can suffer a serious illness that would trigger certain financial business conditions but may not meet the claims triggers on traditional Trauma, Severe Trauma or Total & Permanent Disability Covers, we have introduced the new, unique concept of ‘total long term disablement’.
The concept of ‘total long term disablement’ is that we will consider a claim if the covered person has been suffering an illness or injury which leaves them totally unable to do their own job for 3 months, and is likely to prevent them from being able to go back to that job for at least a further 6 months* into the foreseeable future.
We believe, on balance, that this trigger is more closely aligned to the likely timing for the following key business decisions, and therefore gives the business owners more certainty about outcomes:
- the buy-sell agreement being enforced;
- the business debt requiring repayment;
- the business having to fund the replacement of a key person or sole trader;
- the business having to be sold or wound-up
As well as the covers described above, you can also add the following traditional covers.
- Life Cover
- Total and Permanent Disability Cover
- Trauma Cover
- Severe Trauma Cover
These standard Partners Life covers can also be used to fund buysell agreement commitments, debt repayment commitments and key person replacement costs in the event of the death, terminal illness, total and permanent disability or trauma of a sole trader or key employee or an owner or debt guarantor (whether employed within the business or not).
They can also be used to fund business debt re-payment in the event of the death of any individual. Finally, they can also provide capital to the business to fund replacement costs and loss of revenue in the event of the death of a key employee of the business.
We all want our business to be successful and to grow. As it grows, you might need to take out more cover. Whether your business grows because of a key person becoming more important, a shareholder’s interest becoming more valuable, or an increase in the business debt, by selecting Business Future Insurability Option – you can increase your cover, without having to give us any medical information about the covered person.
You can also choose whether you have all the covers on one policy or split over multiple policies to facilitate differing ownership requirements and it won’t cost you any extra to have the cover split over multiple policies.
Claims time is when it counts. Our intention is to manage claims fairly and ethically, irrespective of what the law might allow us to do as a life insurer, and this is a legally binding promise. We have included our commitment to our claims philosophy into our policy wordings – so we are contractually obliged to behave this way.
If the covered life ceases to be a shareholder, sole trader, key employee or debt guarantor of the business, or if your business goes into receivership, and as a result the covers under the policy are cancelled, Partners Life will allow these covers to be converted to personal Life, Trauma, Severe Trauma or Total and Permanent Disability covers under the Partners Protection Plan, without further health assessment, within 3 months following the cancellation date (some limits and exclusions apply).
Your Life Cover, TPD Cover, Trauma Cover and Severe Trauma Cover is valid wherever you may be in the world. However, for the following, Cover is worldwide as long as the life assured remains an owner, a key person, actively involved in the business operations or liable for business debt:
- Debt Protection
- Ownership Buyout
- Permanent Loss of Key Person
- Loss of Revenue
- Variable Loss of Revenue
This overview is a marketing document that highlights a number of the key features of Specific Condition Cover. The full terms and conditions that apply to those features and to the overall Partners Protection Plan are detailed in the Specific Condition Cover Protection Benefit Sheet and Partners Protection Plan Policy Document available from your adviser