There are so many companies who over the past few years have been putting quite a lot of effort and time to grow the talent. But also, they have been focusing on ensuring every employee is getting the right investment returns too. In such a case, to secure the employee position that is important for smooth operations of the business, the owner must look for the right insurance policy as well. If the employee itself is the breadwinner of the house, then after demise, it should be the insurance that his family should get. That is when the key man insurance comes into action. However, not many people are aware of it.
Key man insurance helps the business to recover from any kind of loss that has happened to its asset through the person who usually owned it or was crucial for it. Talents are becoming quite important for business growth and success. The employees must be treated fair for their contribution to the growth. That is why such insurance is being instructed. This type of insurance popularly is the option where the premium payer and proper both are the employers while the individual whose life will be insured would be the employee. This means the term key used in the key man is the person that company employed for the special skills.
The employee’s death can have two losses for the company.
The first one would be the loss arising from the reduction of the profit that the employee gave to the company
The other one would be the company’s overall price to replace such a key man.
In such a case it is the key man insurance that a company can use if there has been an unfortunate death of an employee. This means the sum assured will be given to the company. Such assurance sums us quite a large amount and is sufficient not just to get the business back in action but also hire the new senior executives as well. If such a person who is insured survives the specified term of the insurance, then the company shall not get any money at all.
Who can be a Keyman?
Usually, a keyman is a person who has got certain skills whose loss can result in the financial disbalance of the company. Such a person can be eligible for this type of insurance. In the case of an organization, the key salespeople, directors and even people with certain skill sets are the Keyman.
The Key man insurance is purely a term plan. It is introduced by the company to ensure the important employees get covered. However, such a policy also has different uses. The amount which is possible to be claimed in future lets the employer not only to make better hiring but also train the key personnel. It ensures there is a security of the loan and settlement done in the right manner. The arrangements of the salary continuation would also be done for the deceased member spouse in the right way.