Profit protection rather than investment
The August 2023 guide allows qualifying premiums where death or disability of an irreplaceable profit-generating employee would cause lost profits. The insured sum must relate to profits attributable to that person, the business must retain the policy, and benefits must not be assigned to the insured or family. Cash-surrender or investment value prevents qualification. The loss must not destroy the entire profit-making structure; a sole proprietor’s policy on their own life consequently does not meet this exception. Ownership by the insured also requires a factual assessment of personal benefit.
Claims and payouts
A recovery under a policy whose premiums qualify is a taxable trading receipt. The tax computation should explain why the insured is a key person; supporting policy and profit evidence are retained for IRAS requests rather than automatically attached to the return. The guide separately notes the YA 2019 change for certain employer-beneficiary group policies treated as staff costs. That group-policy treatment should not be confused with the stricter conditions of an individual key-person policy.
Official source
A concise, independent Apex Gateway guide based on the official English source, not a reproduction of the complete document. Consult the original for full conditions, exceptions and subsequent updates.
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