Cost of Key Person Insurance

How Much Does Key Person Insurance Cost?

  • The cover limit of the plan, the term of the plan and the waiting period are the three most important factors that will affect the cost of the policy. The cover limit can range from $500,000 to $10 million and the term of the plan can range from a few years to a longer time. The waiting period may range from 14 days to 2 years. As a general rule, if you opt for a higher cover limit, a longer term and a longer waiting period then you may have to pay higher premiums. It should be noted that opting for a longer term can help companies avoid the hassle and cost of renewing the policy every few years. If the insurer offers a guaranteed renewability option, an indexation option or any other type of additional benefit with the plan, then the beneficiaries can benefit significantly.
  • The cost of this type of insurance plan not only depends on the cover limit you choose but also certain risk factors. Buyers who are above 40 years old or buyers with one or more pre-existing health conditions, a medical history and genetic conditions may be asked to pay higher premiums. In addition, if the buyer opts for a policy that does not require blood tests, medical tests, a physical examination or a detailed medical history, then the buyer may have to pay higher premiums.

 Why Purchase the Best Key Person Insurance Plan You Can Afford?

  • By purchasing a good key man plan your company can benefit in many ways. For instance, by opting for a good plan you can get a higher cover limit, a higher compensation amount and a shorter benefit period. Good plans have flexible terms that allow the person purchasing the policy to add, change or remove certain features of the purchased plan. A shorter benefit period will ensure that you do not have to wait for 120 days to file a claim. A good policy may also offer one or more additional periods such as less restrictive terms and a longer tenure.
  • The best key man insurance plan can ensure that when a claim is filed, your company gets adequate funds to not only pay debts, but also make a goodwill payment to clients who are affected by the absence of the policy holder that is the key employee. A good key man insurance plan can also ensure that you get a compensation payment for both a capital purpose and a revenue purpose. Good plans are tax deductible, which means that if you opt for a plan with this benefit and you file a claim for a revenue purpose then the premiums will be tax deductible. A good plan can ensure that your company stays afloat, doesn’t have to close down and that you can continue operations when one or more key employees leave the company. A good plan can ensure that you have the capacity to purchase shares from the family of the deceased key holder if in case you require his or her shares. A good plan can ensure that you have the capacity to pay a severance package to your employees if you decide to shut down the business.

Where Can You Purchase Affordable Key Person Insurance?

  • Buyers can purchase affordable key man insurance by either visiting the website of insurers in Australia or by choosing the services of an insurance comparison website. You can save a significant amount of money while purchasing business insurance plans if you compare plans before purchasing, ask for multiple quotes and make use of one or more of the online discounts offered on insurance websites. Remember, insurance comparison websites offer all these services and do not charge any fees for making use of comparison services. Multiple quotes can also be acquired through insurance comparison websites for no fee.

 5 Tips To help you Purchase the Right Key Person Insurance for Your Company

  • Get a Plan that Offers Enough Cover – By getting a plan with adequate cover you will be protected in the future and your company will not face financial upsets if the key employees cannot continue at their designated posts. Purchasing a plan with the maximum coverage may not be necessary for your company either, hence before choosing a cover limit, talk to an expert who can give you personalized advice based not only on your company’s financial needs but also based on the current market.
  • Get a Plan that Offers Flexible Terms – Experts often suggest that buyers should purchase the best plan they can afford and buyers should purchase a plan with flexible terms, since these things do matter while getting a business or personal insurance plan.
  • Read the Terms before Signing the Contract – You may be given a few days to read the terms when you are given the legal document by the insurer to sign. Take that time, to go through the contract, find restrictive terms if any, understand the fee structure and understand premium payment plans offered to you by the insurer.
  • Choose a Premium Payment Plan Wisely – If you are given the option to choose between levelled premiums and stepped premiums then take some time to understand your company’s finances and the benefits of each premium plan offered to you.
  • Pay Premiums Online and Make Use of Discounts – By paying the premiums to the insurer online once a year in advance, your business may be eligible to get a discount on the payable premiums. By making use of loyalty discounts, combined plan discounts or group insurance discounts, you can save an additional amount of money towards premiums. If the key employee is a low risk buyer then you may not have to use these discounts; however these discounts are very helpful in the case of high risk buyers who work in small or medium businesses. Remember, a business insurance plan such as the key person insurance plan can ensure that your company stays operational at all times; even when a partner, principal share holder or any other important employee is no longer working with the company.

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