Business structure determines who owns the policy, who pays the premium, who receives the proceeds, and how tax treatment applies. The right structure depends on whether the business is a sole trader, partnership, company, trust, or SMSF. All 9 panel insurers support business ownership across these structures.
Key person cover is not a separate product. It is a use case on standard Life, TPD, Critical Illness, Income Protection, or Business Expense cover. The structural choice happens at application: who is the Policy Owner, who is the Life Insured, who pays the premium, and who is the beneficiary on claim.
Structure-by-structure summary
| Business structure | Common Policy Owner | Life Insured | Premium paid by | Proceeds to | Notes |
|---|---|---|---|---|---|
| Sole trader | The individual | The individual | The individual | The individual or estate | Key Person doctrine does not cleanly apply (the business is the person). Personal IP and life cover usually more appropriate |
| Partnership | The partnership, or partners cross-own | Each partner | Partnership or partners | Partnership or surviving partners | Common to combine with buy/sell agreement |
| Company | The company | Director, shareholder, or key employee | The company | The company | Cleanest tax treatment; clear separation between business and individual |
| Discretionary or family trust | The trustee | Key person | Trust | Trust, then distributed per deed | Common where the business operates through a trust |
| SMSF (member benefit only) | The SMSF trustee | The SMSF member | SMSF | SMSF, then to dependant under SIS Act | Cannot fund business-purpose Key Person (SIS s62 sole-purpose test) |
| Approved retail super fund | The super trustee | The member | Super trustee (via super contributions) | Super fund, then to dependant | Same limitation as SMSF for business purpose |
What the panel PDSs allow
All 9 panel insurers explicitly support company, partnership, family trust, and (where applicable) SMSF ownership. The PDS evidence:
- AIA Priority Protection PDS (Version 32, 9 November 2025): Ordinary Plan ownership available to individuals and third-party Policy Owners including companies, trustees, and partnerships. Superannuation Life Cover Plan owned by the super trustee.
- Zurich Wealth Protection PDS (1 November 2025): supports "husband and wife, family trust trustees, business partners or self-managed superannuation fund (SMSF) trustees" as ownership combinations.
- TAL Accelerated Protection PDS (12 December 2024): supports individual, super (TAL Super, eligible retail super, SMSF), trust, company/business, and joint ownership. Income Protection has a restriction: "Not available if Self-Employed or if the Policy Owner is a company (that is not a trustee of super)".
- OnePath OneCare PDS (1 October 2025): four ownership variants (OneCare, OneCare Super, OneCare External Master Trust, OneCare SMSF). Outside super: "a company, trustee, or other legal entity, excluding the trustee of a superannuation fund".
- ClearView ClearChoice PDS (13 May 2024, update 5 June 2025): supports company, trust, two or more individuals, or super trustee ownership.
- NEOS Protection PDS (6 December 2024): outside super: "a company, trust, or other legal entity, excluding the trustee of a superannuation fund". Inside super: SMSF trustee or super master trust trustee.
- Encompass Protection PDS (26 September 2025): identical ownership framework to NEOS.
- Acenda Insurance PDS (27 September 2025): supports "an individual or individuals, a company, partnership or the trustee(s) of a family trust" (Glossary). Distinct Acenda Insurance (outside super) and Acenda Insurance (Wrap or SMSF) variants.
- Futura Protection PDS (1 October 2025): outside super: "a company or trust, excluding the trustee of a super fund or SMSF". Inside super: SMSF or super master trust trustee.
Structure determines tax treatment
The ATO TR 2009/2 capital-vs-revenue framework applies to all structures, but how it is applied differs:
- Company-owned cover: cleanest treatment. The company is the policy owner and beneficiary. Premium deductibility (revenue purpose) reduces corporate taxable income at the company tax rate. Capital-purpose proceeds are typically CGT-exempt under ITAA 1997 s118-37(1)(a) where the company is the original beneficial owner.
- Partnership-owned cover: the deduction (revenue purpose) flows through to individual partners per their partnership share. Capital-purpose proceeds may require analysis of beneficial-ownership tests.
- Trust-owned cover: deduction (revenue purpose) flows through per the trust deed's distribution rules. Capital-purpose CGT exemption requires careful trust-deed drafting to maintain original-beneficial-owner status.
- Cross-owned cover (each partner owns cover on the other): the s118-37 exemption applies to original beneficial owners, but cross-ownership can create complexity at claim time. Specialist tax advice is essential.
- SMSF-held cover: SIS Act s62 sole-purpose test bars business-purpose Key Person cover from sitting inside super. SMSF Life Cover is for member benefit (death payment to dependant), not business benefit.
Sole trader limitation
For a sole trader business, the individual and the business are the same legal person. Key Person cover in the traditional sense does not apply because there is no separate business entity to own the policy. Personal Life cover, TPD, and Income Protection serve the same protective purpose. For a sole-founder business with significant goodwill, dedicated cover sized to a wind-down or sale runway is the practical alternative.
Inside-super restrictions
Where Key Person cover is structured inside an SMSF or retail super fund:
- Life Cover: allowed (SIS Regulation 4.07A).
- TPD: restricted to any-occupation definition (SIS Regulation 4.07D, since 1 July 2014).
- Critical Illness / Trauma: generally NOT allowed for new cover post-1 July 2014 (sole-purpose test).
- Income Protection: must align with SIS Temporary Incapacity definition.
For specialist Key Person roles where own-occupation TPD matters (a surgeon, dentist, or specialist consultant), outside-super ownership is essential.
This is general advice only. Discuss specific business-structure considerations with a licensed adviser and your accountant before applying.