What is the purpose of key person cover?

What is the purpose of key person cover?

Key Person Cover allows you to protect your business from the financial impact of losing a key employee (including owners/managers), whose death or illness would have a significant impact on the financial position of the business.

What is the meaning of key person?

Key people are individuals whose skills, knowledge, experience or leadership are important to a business’ continued financial success. Examples of a key individual include, but are not limited to: company directors, sales directors, IT specialist, managing directors and heads of product development.

How does key man insurance work?

For key person insurance, a company purchases a life insurance policy on certain employee(s), pays the premiums, and is the beneficiary of the policy. In the event of the person’s death, the company receives the policy’s death benefit. Key person insurance gives the company some options other than immediate bankruptcy.

Is a key person to insurance industry?

The `keyman’ or ‘key person’ would be any person employed by a company having a special skill set or substantial responsibilities and who contributes significantly to the profits of that organization. In case the company has keyman insurance, on the death of the employee, the sum assured is paid to the company.

What is the purpose of key person insurance?

Also referred to as keyman insurance, key person insurance is a type of business insurance that provides coverage for the key person in a company. The policy functions like life insurance by financially protecting your family and loved ones in the event that you pass away.

Who is the beneficiary in a key person insurance?

Key person insurance is a life insurance policy that a company purchases on the life of an owner, a top executive, or another individual considered critical to the business. The company is the beneficiary of the policy and pays the premiums.

Does key person insurance make sense for your business?

Having key person insurance may make sense for your company if your business’ reputation and financial status is highly linked to a single person’s name, unique skillset, or reputation. And if that person should pass away, the business would be financially harmed. Key person insurance may also be used in partnerships.

What is key person business insurance?

Key person insurance, also called keyman insurance, is an important form of business insurance . There is no legal definition of “key person insurance”. In general, it can be described as an insurance policy taken out by a business to compensate that business for financial losses that would arise from the death or extended incapacity of an important member of the business. To put it simply, key person insurance is a standard life insurance or trauma insurance policy that is used for business succ