5 Facts You Need to Know About Key Man Insurance
When considering the future of your business and your optimum productivity and profit, it pays to think about how you would survive if you were to lose a key employee. Perhaps a business director is the lynchpin of your sales force, or a CEO drives the success of your marketing efforts, allowing you to increase your market share at a rapid pace. You reward your key players while they work for you, but could you cope if they were gone? Here we explain the crucial role of key person insurance in the workplace.
1. Key Person Insurance is for Key Individuals
At its very basic level, key man insurance or key person insurance is a policy a company takes out on a key employee in that company who helps drive the company’s success and is therefore of high value. Key man insurance pays out if the key employee dies or falls critically ill.
2. The Beneficiary is the Company
The company takes out key man insurance on an individual and therefore the company stands to benefit if the insurance is claimed. You can also take out key man insurance on an individual if you are a sole trader, providing you are financially associated with the individual being insured.
3. Key Man Insurance Costs Depend on the Individual
Like other forms of life insurance, the price you pay for a policy depends on the age of the insured, whether they are a smoker, any health issues, and the term of the policy. The exact cost of a policy from an organisation like mykeymaninsurance.com depends on the terms of the policy. In order to find out exactly what you will pay you need to get the policy drawn up and the rates set out on paper. Premiums may possibly be increased if there are any health concerns associated with the employee who is being insured. There may be exclusions written into the policy, for example an exclusion surrounding cancer when the individual has already suffered from the disease and is at higher risk of contracting it again.
4. Key Man Insurance is Quick and Easy
Usually, if there are no major health concerns on the part of the insured and no other problematic issues, the setting up of a key man insurance policy is quick and hassle-free. In straightforward cases, you can approve the terms and cover can start the same day.
5. Cover Amount Varies Between Individuals
It is really a personal decision as to how much cover you choose for a key man insurance policy. You need to work out how much the individual is worth to the company, considering the cost of replacing the person, and how much money would be lost during the search for a replacement. It helps to look at the amount in terms of how much it will cost to run the company without the key individual on board.
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