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
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?
Typically in a company, it is usually the Businessowner, Founder, CEO or perhaps a key
employee or two. These are people who are crucial to the business – the ones whose
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.