Keyman Insurance, also known as Key Person Insurance is an important form of life insurance application for business. Keyman Insurance protects the company against the unexpected loss of a key employee, partner or proprietor whom the success and continuity of a company depends on. The company is the beneficiary of the policy, where the proceed is used to cushion the financial impact of the sudden loss of the key person.
Why is Keyman insurance important?
A company purchases a life insurance policy on its key employee(s). If the person unexpectedly pass on, the company receives the insurance payout. The reason this coverage is important is because the death of a key person can cause the immediate death of the company, especially for a small and medium size companies (SMEs). The purpose of a Key Person Insurance is to help the company survive the blow of losing the person who makes the business work.
The company can use the insurance proceeds for expenses until it can find a replacement person, or, if necessary, pay off debts, distribute money to investors, pay severance to employees and close the business down in an orderly manner. In a tragic situation, Keyman Insurance is a lifeline that help company buy time and options to explore, rather than facing an immediate bankruptcy.
Who are the Key Person of a company?
absence would sink the company. In some companies, it can also be the key Salesperson, CTO, Project Manager, Engineer or Researcher, especially for SMEs or start-
up companies. These are someone who possesses a specific skills and knowledge that is vital to the survival and success of a company.
You definitely need to consider a Key Person Insurance on these key personnel who are important and takes time or very difficult to be replaced. If you need more clarification and consultation on how a Keyman Insurance Policy will benefit your business in Singapore, feel free to contact us.
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