Protect Your Company with Key Man Insurance

If you thought insurance is only for people, you will be surprised to know that even businesses can be protected from financial adversities. In the event of the death of an important person, your business is likely to suffer from a financial setback. To overcome this strain, key man insurance can be quite helpful. Now, you must be wondering what exactly key man insurance is.

Key man life insurance, also referred to as key person insurance, is the insurance coverage provided to key or important persons of an organization. These persons are valuable to the company and premature death of any such person can result in financial loss to the company. The person can be the managing director, project manager, key sales manager, technical expert, etc.

If you have key man insurance, it can be used to cover the losses that the business might face after the death of a key person. The money received from key man insurance can be utilized to train the person who would take the place of the deceased.

In case the business has suffered losses, this money can help to cover up the drop in sales and provide some kind of financial stability to an organization. The employer has to bear the insurance premiums for key man insurance.

Who is it meant for?

All businesses, whether big or small, should insure their key employees. But it is the small and medium size businesses that have to be extra careful because they do not have overflowing funds. They have limited workforce and rely on them for their business. If anything happens to a top executive, it can affect the business severely.

Tumbling sales and decreased productivity in the absence of a key person can become a source of worry. So, it is better to stay equipped to deal with these kinds of situations. Some persons are like backbone of a company. All of us know what happens there’s a problem in our backbone. The whole body is in pain, right? Similar goes for the key man.

If a key man dies all of a sudden, your organization might be exposed to financial turmoil. But this can be avoided with the help of key man insurance. You cannot get that person back, but key man insurance ensures that you have enough resources to find a replacement for that person.

To be eligible for key man insurance, the employee should be well-educated and should possess less than 51% shares of the company. Also, key man insurance is provided on the basis of some factors:

  • Key man’s qualifications
  • His experience in various spheres
  • Previous record and tenure in the company

In this time and age, having key man insurance is the need of the hour. If you want your business/employees to stay protected, key man insurance is the tool. After all, the sole criterion on which key man insurance is based is that the organization should carry on with its operations without facing any kind of financial hurdles.