Revenue Protection

As a business owner, loss of revenue can have a huge impact on your business.

A revenue protection policy can help you protect your business from lost revenue if a key or important person within your business is unable to work due to death, critical illness or total and permanent disability (TPD).

It can potentially protect you from losing thousands of dollars.

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What does Revenue Protection cover?

Wages of replacement

The wages of a  replacement for the key person can be covered in your businesses policy..

Lost Revenue

Your business may rely on a small number of people’s skills and intellectual property to help bring in business. If one of these people is no longer able to work in the business, revenue can be affected. This loss can be covered by in your businesses insurance policy.

How do I assess the loss in revenue?

It can be difficult to work out how much revenue could be lost if a key person is no longer able to work in the business.

In general the below should be considered:

  • The nature of the business and how it generates income
  • Structure of the business
  • Roles, duties and skills of the individual
  • How the individual generates income
  • Number of staff and their roles and duties
  • The financial impact on the business of losing the individual
  • Other levels of key person insurance within the business

Other things you should know

Policy ownership

Generally, the business will be the policy owner and will be responsible for paying the premiums, however it is important to consider all your policy ownership options.


Generally the business will be the beneficiary of any lump sum paid out. This allows the business to use the money to help cover financial losses.

Tax implications:

As keyman insurance is revenue protecting in nature, the premiums are generally tax deductible to the business. However any benefits paid out are assessable as normal income. As each business is unique it is generally best to consult with an accountant or tax agent before deciding on any keyperson insurance policies.

What cover types are available

Life Insurance
TPD Insurance
Trauma Insurance

Case Study:

Lili runs a successful chain of florists with her sister Julia. Julia is responsible for operations, accounts and human resources, Lili overseas the purchasing and merchandising of the stores, marketing as well as being the account manager for a number of their corporate clients.

As both sisters are reliant on the other to run the business, the business takes out Life and TPD insurance policies in which the business is the beneficiary.

When going through the application process, the two worked out that Lili brings in approximately $150,000 per year in corporate business through her contacts, and her additional responsibilities bring in approximately $100,000 and Julia brings in $375,000 through her operational and human resources management.

Unfortunately Lili is diagnosed with a brain tumour and needs to undergo immediate chemotherapy and radiation treatment before surgery. Due to her illness and treatment, Lili is forced to step away from the business. As a result of Lili stepping down from the business, Julia is forced to hire someone to manage the corporate accounts as well as the marketing, purchasing and merchandising functions.

Thankfully, as Lili and Julia had taken out a key person insurance policy which covered trauma insurance, their business receives a trauma benefit of $250,000 to cover the business for any lost revenue while Lili is away from the business as well as allowing for the hiring of new staff.

Published: March 26, 2015
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