The importance of a family’s breadwinner’s life insurance policy in the event of his passing away is certainly not unknown. However, most of us are still unfamiliar with the pivotal role that life insurance, in the guise of Keyman insurance, plays for businesses.
What is the Purpose of Keyman Insurance?
Generally, Keyman insurance of key person benefits (as they are often referred to as) help businesses recover from the loss of its valuable assets, i.e. the individuals who are at the helm of their organization or the ones who founded it and/or own it.
Incredibly valuable workers who contribute significantly to the operations and growth of a business are increasingly becoming an important factor in investors’ valuation of financial assets.
Hence, it becomes infinitely more beneficial to insure against the devastating event of their demise, so as to avert any possible business or financial losses that the company might incur in the aftermath.
What is Keyman Insurance?
Keyman insurance, by definition, is an insurance policy whereby the premium payer and the proposer are one and the same person, the employer; and the life to be insured is that of the same employers’ chief employee or Keyman. In case of Keyman’s untimely death and an eventual claim, all the benefits go to the employer.
It’s important to note here that a Keyman can be any employee who possesses a specific skill set and performs substantial responsibilities, including but not limited to decision-making, leadership vision and strategic direction and high-level project planning.
As the name suggests, the key person is the key to the overall success of the business; with them gone, there are good chances that the company stumbles to the brink of collapse.
The intent behind Keyman insurance is to cover the lives of key personnel in exchange for a monetary value. While doing so, it ensures that the firm is reimbursed with monetary assistance in the form of insured money, as a compensation for the financial loss it met with due to the untimely loss of a key employee.
Why Should You Opt for Keyman Insurance?
- It safeguards against the business risks involved with the death of a key person.
- The premium paid is regarded as business expenses. Also, the company saves a substantial amount of surcharge on every dollar of premium paid.
- The death of a Keyman can disrupt business lines of credit beyond repair. The insurance money serves as a guarantee for loan repayment.
- If nothing else, it boosts the morale of the key person. They feel valued and important. This sense of belonging leads to increased productivity at workplace.
If you are looking for competitive and customer-centered Key person benefits plans for your key employees, we recommend you get in touch with JS Benefits Group’s specialized team of Employee Benefit Professionals.
Request a free consult on our website or call us at: (877) 355 – 6070.
