Business Keyman Policies In Singapore
Definition: Life insurance on a key employee, partner or proprietor on whom the continued successful operation of a business depends. The business is the beneficiary under the policy
Keyman insurance is life insurance on the key person in a business.
Typically in a business, this is usually the owner, the founders or perhaps a key employee or two. These are the people who are crucial to a business–the ones whose absence would sink the company. You definitely need to consider key person insurance on those people.
Why is Keyman insurance important?:
A company purchases a life insurance policy on its key employee(s). If that person unexpectedly dies, the company receives the insurance payoff. The reason this coverage is important is because the death of a key person in a small company can cause the immediate death of that company. The purpose of 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, key person insurance gives the company some options other than immediate bankruptcy.
Who can be considered a KEYMAN in a company?
As previously mentioned, a keyman employee is one that can caused a negative financial impact on a company’s sales revenue and profitability. Therefore, a keyman employee could be a Director, key Sales Person, key Project Person or someone who possesses a specific skills and or knowledge that is vital to the company.
If you need more clarification and consultation on how a Key Man Protection Policy will benefit your business in Singapore, please feel free to contact us.