In any company only some individuals make the important decisions. The implementation or performance of these decisions down the line makes or breaks the business. Any person with specialized skills, whose loss can cause a financial strain to the company are entitled for Key man Insurance. For example, they could be:
· Directors of a Company
· Key Sales People
· Key Project Managers
· People with Specific Skills
Key man Insurance is a Life Insurance cover under a suitable Plan of guarantee affected by the company to pay damages for the Financial Loss suffered following the death of a Key Member or Staff of the Organization. Key man guarantee does not provide for indemnification of loss incurred but only for the benefits as per the plan of assurance selected.
Key man insurance helps a company in times of failure and also helps key staff if the policy is assigned to them.
Few key people on account of their particular skills, foresight and business acumen bring better revenues, profits, brand-value to the organization. Hence, the unexpected exit of these key individuals can have a negative impact on the organization.
Key man insurance is a corporate-owned life insurance it covers on key person/persons in business directors; key sales people; key project managers or any person holding substantial responsibility and contributing significantly to profits of that organization.
Key man Insurance provides unique opportunity to protect business against the unfortunate loss of key people, while giving valuable tax benefit and attractive tool to help employee loyalty too.
The object of key man Insurance is to look after the company from the adverse financial effect by the Key Employee or Key Director’s death by making funds available to the company in his absence. The company’s development and profit, usually depends upon the vital decision or technical expertise skill, knowledge, entrepreneurial vision of its Key Director or Key Employee, particularly in this competitive Globalised marketing Environment.
Today’s company’s extension diversification, and setting up policy depends upon its Far sighted Vision, decision, technical know-how of the Key Director and Key Employee and that’s required to be secured by purchasing Key-man Insurance for making funds available for promoting, recruiting in the absence of Key-man includes key-woman. This policy is in particular purchased by the company for the life of its single most important Key person.