August 2014 Issue 96

Specialist advice for specialists

B2B Editor1 August 2014


Up until now, Australian businesses have been able to insure against the negative financial impact that can arise if a key person dies, suffers from total permanent disability or a trauma event. However, the unexpected temporary absence of an owner or income-generating employee due to sickness or injury can also have a severe financial impact, especially for small businesses where the revenue may be generated by a few people.

Key person income

Key person income cover can be used to help small businesses protect against this financial risk by providing a monthly benefit to the business for up to 12 months if an insured key person is unable to work to their full capacity due to sickness or injury.

Who is a key person?

A key person can be a business owner or an arm’s length employee with specific skills and knowledge who is working in the business to generate revenue. The loss of the key person
would result in significant loss of revenue during the continuation of business operations. Here are some typical examples of key people:

1. Working Director, Managing Director or CEO

2. Partner in a partnership

3. Employee with a particular skill or technical expertise

4. Senior sales manager.

A business owner may be insured for a portion of the revenue they generate for the business.

An employee may be insured for a percentage of the employee’s remuneration package.

If you have a key person risk in your business and would like to discuss strategies to protect your cashflow and underlying profit please contact us.

Luke Smith & Malcolm Phillips are Authorised Representative of Financial Services Partners Pty Ltd, ABN 15 089 512 587 AFSL 237590.

Dragonfly Financial Services is a boutique and professional financial planning practice that services the financial advice needs of Canberra and surrounding communities. We specialise in self managed superannuation,personal risk protection, business insurance and investment advice.

About Luke

Luke has been providing financial planning advice since 2005. Luke has the knowledge and ability to explain complex financial planning matters in a simple, easy to understand format. This leads to a partnership with clients as they understand the basis of the advice being presented to them.

Luke’s expertise covers a broad range of financial strategies. These include government and military superannuation, tax effective investment strategies, self managed superannuation fund investment and management as well as business and personal risk insurance.

Luke was voted wealth protection adviser of the year within his national dealer group in 2012.

DRAGONFLY Financial Services

Unit 10/3 Sydney Avenue Barton, ACT 2600 T: 02 6273 3118 F: 02 6273 1118
E: [email protected]