Review Key Person cover at least annually, plus at every triggering business event: revenue growth, ownership change, new loan, new key person, or buy/sell variation. Annual review with formal reassessment every 3 to 5 years is the industry-standard cadence.
This is general advice only. Engage a licensed insurance adviser to coordinate the review with your accountant and lawyer.
Why annual review matters
Key Person cover is sized to a financial exposure that changes year on year. Common drift factors:
- Business value increase raises buyout and debt-protection requirements
- Key person remuneration growth raises revenue replacement requirements
- New business loans or director guarantees add debt-protection needs
- New shareholders or partners create additional buy/sell triggers
- Ownership restructure (incorporation, trust, SMSF) changes policy ownership and tax treatment
Without review, sums insured drift downward in real terms. Conversely, businesses that retire debt or reduce headcount may carry over-insurance that wastes premium.
Trigger-event reviews
Five event types should automatically trigger an out-of-cycle review:
- Substantial revenue change (more than 20 per cent year on year)
- Ownership or governance change (new director, departing partner, equity vesting)
- New business loan or guarantee, especially where personal assets are pledged
- Buy/sell agreement variation or new shareholders agreement
- Key person role change (promotion, demotion, departure, retirement)
Panel insurers support automatic increases without medical evidence when these events occur, through Future Increase Benefit / Guaranteed Future Insurability business-event triggers:
- AIA Business Safeguard Forward Underwriting at $10 million cap (AIA Priority Protection PDS 9 November 2025, Section 8.12, page 157)
- Acenda Business Safeguard Option at $15 million for Life, $5 million for TPD professional, $3 million for TPD other, $2 million for Critical Illness (Acenda Insurance PDS 27 September 2025, pages 56 to 58)
- Zurich business cover events for key person, loan/guarantor, and buy/sell increases (Zurich Wealth Protection PDS 1 November 2025, with $15 million death-benefit increase cap)
- TAL Business Insurance Option under Guaranteed Future Insurability (TAL Accelerated Protection PDS 12 December 2024)
- OnePath Future Insurability business events (OnePath OneCare PDS 1 October 2025)
- NEOS Future Increase Benefit at $200,000 per event (NEOS Protection PDS 6 December 2024)
- Encompass Future Increase Benefit with explicit "revenue protection (key person) insurance" trigger (Encompass Protection PDS 26 September 2025)
- Futura Future Increase Benefit at $200,000 per event (Futura Protection PDS 1 October 2025)
- ClearView Future Increase Benefit business events (ClearView ClearChoice PDS 13 May 2024 with 5 June 2025 update)
What to check at each review
The review checklist covers:
- Sum insured adequacy measured against current business value, debt, and recruitment cost
- Cover type mix (Life, TPD, Critical Illness, Business Expense Cover)
- Capital versus revenue purpose split per ATO Taxation Ruling TR 2009/2
- Ownership structure (company, partnership, trust, SMSF) and FBT consequences under the Fringe Benefits Tax Assessment Act 1986
- Beneficiary nomination alignment with current shareholders agreement and buy/sell deed
- Underwriting reassessment opportunities if the key person has improved health, quit smoking, or had a hazardous occupation change
- Premium structure (stepped versus level) appropriateness given the planned holding period
When to retire cover
Not every change increases cover. Retire or reduce when:
- Business loans are repaid and debt protection is no longer needed
- A founder transitions to non-executive role and revenue dependency falls
- An owner exits and their share is bought out
- The business is sold and the buyer establishes their own Key Person arrangements
Documentation discipline
Keep a review file containing:
- Annual review report (sum insured, premium, beneficiary, purpose)
- Accountant's letter confirming the capital or revenue purpose
- Buy/sell deed and shareholders agreement (current version)
- Loan documents requiring Key Person cover (where applicable)
- Underwriting evidence for forward-underwriting increases
Cross-references: Insurance Contracts Act 1984 s29 (duty of utmost good faith continues post-issue), Life Insurance Code of Practice 2019 (claims and communication standards), and ATO TR 2003/9 (life insurance policies).