Compare Key Person insurance

In New Zealand if you have your own business you can have a special insurance. Key Person insurance provides you with cover in the event something went wrong with you or even your main employee. This type of insurance is called

Key Person insurance

The best part about this type of cover is that the benefit is paid after a number of weeks of waiting period. Majority of Kiwi business owners prefer to have 4 weeks of waiting period due to affordability level.

The benefit is going to be paid straight into your business account. You can allocate the money you receive from the insurance company the way you need to keep your business alive. For instance you can pay the money to your locum or to your employees or pay the rental payments. The benefit does not have ACC offsets which means that if the owner is yet qualified (due to an injury) to receive ACC benefit – it will not offset the insurance payments and the business owner is going to receive both payments. One from the insurance company and the second from ACC.

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 Key Person insurance

Each and every day you as the business owner put yourself in danger: Let me compare a few things:

If you are working for someone you are protected from ACC point of view and in he even you had an accident you are going to be paid 80% of your pre-disability income. If on the other hand you have been in business for the last couple of years and yet have to submit your financials to IRD and ACC – this means you are going to get a very small amount of money from ACC due to your yet to be proved income for the last year. To make the matter even worse – if due to some unknown reason you get sick – you do not have any income- ACC only pays for accidents and pay nothing for sickness. This means with the uncertainties that might come along the way, it is a wise decision to invest your money in a policy where you can get the maximum benefits being the business owner.

Key Person insurance is for small and medium Kiwi businesses available from major insurance companies in New Zealand, such as AMP, Asteron and Fidelity Life.

For instance, these premiums you would pay for a key person who works as an electrician.

 Gender
Male

AMP

Asteron

Fidelity
40 years old $300.58 $213.15 $249.78
45 years old $400.44 $285.69 $289.92
50 years old $612.17 $436.54 $415.35

 

 Gender
Female

AMP

Asteron

Fidelity
40 years old $456.61 $329.88 $349.69
45 years old $600.66 $429.36 $405.89
50 years old $918.26 $595.88 $581.50

Key Person in the business can be insured for up to $20,000 a month for a period of 1 year. The benefit is an “agreed amount” of money which means that the business owner is certain that if something went wrong with himself or the key person in the business due to sickness or disability the business will survive and the business is going to have money. The policy term is up to age 65 and it is available for occupation classes 1, 2 and 3. What is good about this specific cover is that the policy is owned by the business which only means that the business can choose how benefits are used for.

Key person insurance Auckland

Key business person Insurance 🙂

The individual insured will get an agreed monthly benefit up to 12 months after the waiting period. In case the person is unable to fulfill his tasks and duties due to disability for at least 2 weeks, the policy can provide partial benefits. Furthermore, a person suffering from a relapse within 6 months will continue the previous claim.

Majority of Kiwi business need to know that there are products in New Zealand which would allow them to have certainty. In my opinion “Key Person” insurance needs to be taken out with “Mortgage insurance”. The first cover will provide the business owner with the agreed amount of benefit paid by the insurer in the first 12 months while the mortgage insurance with mortgage payments after 12 months. Keep in mind in my recommendations I use only the product which pay either rent or mortgage- as long as the insurance company has underwritten the covers. Please refer to the video below and the diagram which explains how each and every product works.

There is another example, so much money you would pay for a key person who works as an administrator.

 Gender
Male

AMP

Asteron

Fidelity
40 years old $208.27 $124.25 $171.28
45 years old $277.15 $167.91 $198.80
50 years old $424.07 $252.88 $284.81

 

 Gender
Female

AMP

Asteron

Fidelity
40 years old $312.40 $182.53 $256.92
45 years old $415.72 $240.28 $298.20
50 years old $636.12 $323.58 $427.22

If you are yet in doubt and want to discuss your best way to insure yourself or your key employee call my office.

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Photos courtesy of Paul Inkles and Sam Churchill (CC ShareALike)