Key Person Insurance
In most businesses, one or two people are responsible for a disproportionate share of the revenue, the relationships, and the expertise. Key person insurance protects your business against the financial consequences of losing them.
Key person insurance
Protecting your business from its most significant people risk
Most businesses would survive the loss of a piece of equipment or a physical asset. Many would not survive the sudden loss of their most valuable person. Key person insurance provides the financial resources to absorb that loss and keep the business moving forward.
Who in your business is most critical to its success? What would happen to your revenue, your client relationships, and your operations if that person died or was permanently unable to work? How long would it take to replace them and what would it cost?
Key person insurance pays a lump sum or an income stream to the business on the death or disability of a key individual. It is designed to cover the financial losses the business suffers — including lost revenue, recruitment and training costs, and loan covenant obligations — while the business adapts.
What's Included
Key person insurance is also frequently required by lenders as a condition of business lending. If your business has borrowed money secured against the performance of a key individual, key person cover may be a legal or contractual obligation as well as a sound business decision.
We work with you to identify your key people, quantify the financial impact of their loss, and structure cover that adequately protects the business at an appropriate cost.
Key person identification and financial impact assessment
We work through your business to identify the individuals whose loss would have the greatest financial impact, and quantify that impact across revenue, client retention, and operational continuity.
Sum insured calculation
We calculate the appropriate sum insured based on the key person’s contribution to revenue, the cost of replacement, and any loan or contractual obligations that would be triggered by their loss.
Policy ownership and tax structuring
Key person insurance is typically owned by the business. The tax treatment of premiums and benefits varies. We make sure the policy is structured correctly from the outset.
Integration with lender requirements
If your business lending requires key person cover, we make sure the policy meets the lender’s requirements and is appropriately structured alongside your other business insurance.
What people say about Collaborative Consulting
“I got to know John whilst working with him in developing his company’s brand principles to strengthen the emotional connectedness with his clients. During this period, I gained a deep understanding of John’s ethics and strong desire to help people both through the good times and the bad times.
His strongest desire is to make a tangible difference for his clients and future generations of their family. John has a strong sense of family, he believes strongly in wanting to contribute back to the community.
I can honestly say I have not met a financial adviser where money is not the financial driver for him, it’s much more personal, it’s about making a difference. I’d recommend anyone who wants certainty in their financial investments talk to John.”
Michael Major BA (Hons) MDM
Property Development Consultant, Future Proofing Strategist
“John is the consummate professional in the Financial Planning and Investment sector. He has walked the talk, having successfully grown and lead businesses to achieve dramatic results. Through it all, he has helped people reach their personal and professional goals and engages with them comprehensively to ensure they achieve what they need to.
There’s no nonsense with John – if you want to succeed, he will help you do it and in doing so, you will meet and be assisted by one of the nicest and most professional people I know, who also lives by a set of principles steeped in integrity. A hard thing to find these days!
I strongly recommend you contact John and get to know him. You won’t regret it.”
Warren Cummins
Managing Director, Dale Carnegie Auckland and BRS Management
“Choosing someone to look after your money is an important decision especially if you are like me and have no idea about investments.
When I left my marriage I had money from the sale of the house. As I was now on my own financially I understood that I needed to ensure that not only was my money going to be safe but would also be working for my future.
I met with a few financial advisers but none of them really instilled me with confidence. I was feeling a bit lost and frightened about making the wrong decision.
Pam Martin
Arbonne Independent Consultant
“We are all specialists in our own area of business. We love referring our clients to an equally dedicated specialist, John Milner of Collaborative Consulting Ltd.
John has been able to help our clients leverage and re-invest their hard-won gains, made both personally, and in business. John has been working in his area of Investment Expertise for a long- time, so has ridden all of those waves in the marketplace. He is committed to helping clients mitigate their investment risk, and in these days and times, his level-head and thorough but relatable approach to Investment are exactly what we all need.
He makes investing simple, effective and takes the worry away.”
James Kelso
CPA, Director, Kelso Marsh Consulting Ltd
“I have known for some time now as part of my business networking group. From the start I have been impressed by John’s professionalism and his knowledge base. John takes what he does seriously and is quite clearly very dedicated to serving his clients well.
I have no trouble recommending him to anyone in need of sound financial advice.”
Rory Laubscher
Corporate Photography Specialist Firefly Photography
Our Process
When you work with us, we use our proven 3-step system. By understanding your situation and the goals you want to achieve, we work out a unique plan to help you get there smoothly.
Key person cover that keeps your business financially secure
Years of experience helping New Zealand businesses structure key person insurance as part of a comprehensive business protection strategy.
The financial impact of losing a key person can be existential for a small or medium business. Key person insurance ensures the business has the resources to survive that loss and continue operating while it adapts.
Frequently Asked Questions
Have a question about key person insurance? Get in touch — we are happy to help.
Who qualifies as a key person for insurance purposes?
A key person is anyone whose loss would significantly impact the financial performance of the business. This typically includes the business owner, a key salesperson, a specialist with unique expertise, or anyone who maintains critical client relationships.
How much key person cover does my business need?
The sum insured is typically calculated as a multiple of the key person’s contribution to profit, the cost of replacing them, or the outstanding business debt secured against their performance. We calculate this specifically for your business.
Is key person insurance tax deductible?
The tax treatment depends on the purpose of the cover and how the policy is structured. In some cases premiums are deductible but benefits are taxable. We recommend you confirm your specific situation with your accountant, and we can help you structure the policy appropriately.
Does key person insurance cover both death and disability?
Yes. Policies can be structured to cover death only, total and permanent disability only, or both. We recommend covering both in most cases, as disability is statistically more likely than death for working-age adults.
What happens to the policy if the key person leaves the business?
If a key person leaves voluntarily, the policy is typically cancelled or restructured. The cover is specific to the individual and the role they play in the business.
Can key person insurance also protect against temporary absence?
Key person insurance typically covers permanent loss (death and TPD). For temporary absence due to illness or injury, income protection or business continuity insurance is more appropriate. We often recommend both.
Do you work with businesses across New Zealand?
Yes. We advise businesses throughout New Zealand on key person insurance via video call and phone.
Related financial advice and wealth management services
With Collaborative Consulting by your side, we can help across a broad range of protection and financial planning needs.
Maintain cash flow and operational capacity during a disruption — complementing key person cover for a complete business protection strategy.
Fund the buyout of a deceased or disabled shareholder’s interest — ensuring ownership transitions smoothly without financial strain on the business.
Ensure your business debts are covered if a key person dies or is permanently disabled — protecting the business from lender action.