Keyman Insurance
What is Key Man Insurance?
Key Man Insurance is a financial safety net that helps businesses mitigate the financial impact of losing a key individual due to death, disability, or critical illness. It ensures business continuity and protects against potential losses.
Key Features of Key Man Insurance
- Coverage Options
- Life Insurance
- Disability Insurance
- Critical Illness Insurance
Who Needs Key Man Insurance?
Small businesses heavily dependent on the skills or leadership of one or a few individuals.
Startups reliant on founders or key personnel.
Companies with significant client or supplier relationships managed by one person.
Benefits for Businesses
Provides funds to hire and train a replacement.
Covers loss of revenue during transition.
Offers peace of mind to stakeholders, investors, and lenders.
How Does It Work?
- Policy Ownership: The business owns the policy, pays the premiums, and is the beneficiary.
- Coverage Amount: Determined based on the financial impact of the key individual’s absence.
- Payout: A lump sum is paid to the business in case of the insured event.
Tax Implications
Premiums are generally not tax-deductible unless the payout is considered taxable income.
The proceeds are usually tax-free but may vary based on local tax laws.
How to Choose the Right Policy?
Evaluate the financial contribution of the key person.
Assess risks specific to your business or industry.
Consult with a broker to determine the best coverage for your needs.
