What types of coverage are included in key person insurance policies?

Four cover types can be structured as key person cover: Life, TPD, Trauma (Critical Illness), and Business Expenses or Income Protection. The right mix depends on the financial risk being covered.

Key person cover is a use case overlaid on standard panel insurance products. No insurer sells a separate 'key person product'; they sell standard cover types that the business owns on the key person's life.

The four cover types in business context

1. Life Cover (lump sum on death or terminal illness)

Paid to the business on death of the key person. Funds recruitment, revenue replacement, debt repayment, or shareholder buy-out. The most common base layer of key person cover. Available across all 9 panel insurers.

2. TPD Cover (lump sum on total and permanent disability)

Paid if the key person becomes permanently unable to work. Funds the same outcomes as Life cover when the key person survives but cannot return. Available across all 9 panel insurers. Note SIS Regulation 4.07D: own-occupation TPD inside super is not available for new cover since 1 July 2014; for key person purposes where own-occ matters, structure outside super.

3. Trauma or Critical Illness Cover (lump sum on diagnosis)

Paid on diagnosis of a defined medical event. Useful where the key person is likely to survive but recovery takes 12 to 24 months. The lump sum funds interim management or debt service while the person recovers. Available across all 9 panel insurers, but only outside super for new cover post 1 July 2014 (SIS sole-purpose test under SIS Act 1993 s62).

4. Business Expenses or Income Protection Cover (monthly benefit)

Reimburses fixed business overheads (rent, lease, wages, utilities) while the key person is disabled. Typical benefit period is 12 months. Critical for businesses with high fixed costs that continue running even when the key person cannot.

Panel availability of Business Expenses cover

| Insurer | Business Expenses cover | |---|---| | AIA | Business Expenses Plan (Section 6, Ordinary Plan only) | | Zurich | Zurich Business Expenses (standalone product, includes key person replacement variant) | | TAL | Business Expense Option (Income Protection add-on) | | OnePath | Business Expense Cover (PDS Section, $60,000 per month max) | | ClearView | Business Expense Cover (outside super only, excluded for Class C/CC occupations) | | Acenda | Business Expenses + Business Expenses Platinum Option | | NEOS | Not offered as standalone cover | | Encompass | Not offered as standalone cover | | Futura | Not offered as standalone cover |

See AIA Priority Protection PDS (Version 32, 9 November 2025), Section 6 (Business Expenses Plan); Zurich Wealth Protection PDS (1 November 2025), Zurich Business Expenses section (Business expenses cover provides a monthly benefit that reimburses either allowable business expenses or key person replacement costs); Acenda Insurance PDS (27 September 2025), page 34.

Trauma cover product names across the panel

• AIA Crisis Recovery (the AIA name for Trauma; Ordinary Plan only)
• Zurich Wealth Protection Trauma (with Trauma Plus partial-payment option)
• TAL Critical Illness Insurance Plan (PDS Section 2.3)
• OnePath OneCare Trauma (Comprehensive and Premier tiers)
• ClearView ClearChoice Trauma
• NEOS Critical Illness Cover
• Encompass Critical Illness Cover
• Acenda Critical Illness
• Futura Critical Illness Cover

Condition lists and qualifying periods vary between products. Zurich Wealth Protection PDS records 43 full-benefit conditions plus 13 partial-benefit conditions; TAL's product lists around 40 conditions. Survival periods are typically 14 days. Review the relevant PDS before selection.

How cover combinations are structured

Most key person packages combine:

• Life + TPD: protects against death and permanent disability (a common base).
• Life + TPD + Trauma: adds short-term disruption protection from critical illness.
• Life + TPD + Business Expenses: for businesses with high fixed overheads.
• Life + TPD + Trauma + Business Expenses: full coverage for high-revenue-dependence businesses.

Each cover within the package can have a different sum insured and a different documented purpose (revenue vs capital). Maintaining separate documentation simplifies tax administration.

Regulatory anchors

All panel cover sits under the Life Insurance Act 1995 (Cth) and the Insurance Contracts Act 1984 (Cth). Tax treatment turns on ATO TR 2009/2. SIS restrictions on TPD inside super come from SIS Regulation 4.07D; Trauma inside super sits under SIS Act 1993 s62 sole-purpose test.

This is general advice only. Cover mix and structure depend on business circumstances, the key person's role, and tax position. Discuss with a registered tax agent and a licensed insurance adviser before applying.