Keyman Insurance (FAQ)
Would your business survive if a key member of staff suddenly passed away? This is probably the worst-case scenario for most, but it is a fact that the sudden death or long-term absence of a vital employee could be destructive for a company's success. This is where Keyman insurance comes in.
1.What is Keyman insurance?
Keyman or key person insurance is purchased by a business in order to insure the life of who they consider their most valuable employees.This policy will protect the business from any possible loss of profits in the event that this key person passes away or becomes disabled unexpectedly.
2.Who is deemed a key person in the business?
Who exactly qualifies as a key person depends on the nature of your business, but generally speaking these are employees who would cause the profits of the business to suffer if they died or were unable to work. Employees typically covered are decision-makers, high level executives, top salespeople and employees with a unique set of knowledge or skills.
3.Does my business need Keyman insurance?
If your business would suffer dramatically if one of your employees suddenly died or became disabled, you need Keyman insurance. Most small businesses need this type of coverage as they often heavily rely on one or two people that are extremely hard to replace.
4.How does Keyman insurance work?
Keyman insurance is basically a term insurance plan. The term of the policy is such that the policy expires as soon as the employee retires. For example, if an employee is 40 years old when the policy is bought and the retirement age is 65, the term of the policy would be 25 years. If the employee happens to die during the term of the policy, the insurance will pay a death benefit to the employer. If it matures, i.e. the employee retires at the age expected, no benefit will be paid.
5.Are there companies which cannot buy Keyman insurance?
Yes. Companies that are making a loss and not a profit are not eligible to buy a Keyman insurance policy.
6.What is the typical cost of Keyman insurance?
The exact price depends on a variety of factors. Things that can affect the cost is the value of the business, how critical the person to be insured is to the business, and whether the policy is used to cover life only or being combined with critical illness and protection of income.
For further questions regarding Keyman Insurance, do not hesitate to contact us at [email protected]