You may of heard of key man insurance but were unsure of what it is or does. As a result, we’ve broken down everything you need to know …
What is Key Man Insurance?
Keyman Insurance is a life insurance policy which is written on the life of a key business employee. It is taken out by businesses to safeguard any loss of earnings and potential expenses should something happen to their key personnel. In the event of death or even critical illness should the company choose this option, the policy is paid out directly to the business.For this reason, it is the business which is responsible for setting up and paying the premiums of the policy.
Who is a Key Man?
A ‘Key Man’ is an employee whose death or continued absence would affect a company’s income or long-term profits, as well as impacting the general running of the business.
These individuals tend to operate at senior levels within a company and may include but not limited to C-Level members, Directors, Head of Departments and General Managers. In essence, anyone the business considers to be a ‘figurehead’ in the company could be eligible for Key Man Insurance.
Good to Know:
Setting up key man insurance for your business is often essential. We don’t usually tend to think about what we’d do if the unthinkable were to happen. How would you cover the loss of profits and pay for the cost of hiring and training a replacement?
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