Key Person Business Insurance – Peter, John and Tony’s story

Roof Mates Pty Ltd is a business based in Adelaide and has three employees.

Tony (26) does all of the installation of the roofing, Peter (42) does the accounting and administration, while John (31) does the sales and marketing to attract new clients. Business revenue quickly builds up to $30,000 per month.


Regretfully, ten months later Tony falls from a ladder, becoming a paraplegic, and can no longer work.

Peter and John do not have the expertise to install roofs. Consequently, they have to find a skilled employee to replace Tony; however, they are unable to attract an experienced person, as they business is relatively new and potential employees do not wish to risk moving across to such a new venture.

As a result, Peter and John have to advise clients they cannot complete the roof installations they booked in. Clients go to Peter and John’s competitors to get their jobs done. Within a few months, Roof Mates Pty Ltd closed down.

A Trauma policy should have been taken out on Tony’s life. The sum insured should have been enough to cover revenue losses for six months, ie $180,000. The insurance funds could then provide a cash injection into the business upon Tony’s paralysis, allowing the business to show a strong financial position and attract a replacement for Tony.