What is Keyman insurance?
Keyman refers to key persons in companies or enterprises (such as senior
managers or the managing boss). Keyman
insurance refers to one of insurances that a company may be insured
according to economic loss brought by the death of its key managers.
If the key person passes away, his death to some extent brings forward economic loss for the company. Hence, a company under good management must buy keyman insurance
to avoid causing economic upheaval to the company in event that the key
people leave the world.
Why Key Person Insurance Matters
The loss of an owner or a key personnel whose contributions are integral for a business’ success can be devastating. It can result in a drastic loss of profit, customer base and even reputation. Protecting your business against such risks is often a prudent step toward business continuity, while addressing the concerns of your key stakeholders.
Key people dominates a role of life-and-blood in the entire business. Without them, it may bring losses to business to certain extent. Key Man Insurance is a policy taken by an employer to mitigate financial losses in the event of a loss of key individual, whether it is the owner, important senior executive or a key contributor whose knowledge, work, or overall contribution is considered uniquely valuable to the business. Although it does not indemnify actual losses, the company will obtain a sum of insurance premium to make up for the loss so as to prevent itself from falling into the dangerous situation of liquidity problems.