Key Person Disability: Definition, Benefit Period & Cost Explained
Key Person Disability explained: own-occupation definition, 1–5 years benefits, 90 days elimination period, $60–$150/month. Who it fits and the clauses that matter.
Key Person Disability is structured around a own-occupation definition, pays for up to 1–5 years and starts after a 90 days elimination period. Typical premium: $60–$150 a month. Pays the business when a key person is disabled, funding a replacement or covering lost revenue.
Contract terms
| Term | Value | Why it matters |
|---|---|---|
| Definition | Own-occupation | Decides whether a claim is payable |
| Benefit period | 1–5 years | How long income continues |
| Elimination period | 90 days | How long you self-fund first |
| Typical premium | $60–$150 | Per month, age 35–45 profile |
| Best for | Businesses with one indispensable earner | Where this structure earns its keep |
The definition of disability is the clause that decides everything else. Two policies with identical premiums and benefit periods can behave completely differently when a claim arrives, because one protects your profession and the other protects only your ability to work at all.
Where this structure fits
- Choose it if: you are a businesses with one indispensable earner and your income depends on a specialised skill.
- Budget note: $60–$150 a month buys roughly 60% of income — fund the elimination period of 90 days in savings.
- Watch: mental and nervous claims are commonly capped at 24 months regardless of the headline benefit period.
Pair the policy with your existing group cover rather than replacing it: group plans are cheap but taxable and end with employment, so the individual layer should be sized to the tax-adjusted gap, not to the group benefit percentage.
Cost over the policy life
At $60–$150 a month, a decade of cover costs roughly 7,200 dollars in premiums — against a single year of lost income that would otherwise be unfunded. That ratio is why disability cover is priced by definition and age, not by marketing.
Key Person Disability: own-occupation definition, 1–5 years benefit period, 90 days elimination. Buy it for the definition, not the premium.