In many companies today there are a few Individual talents who have a special skill set or substantial responsibilities that are critical to the successful running and growth of a company. This key employee is the ‘Keyman’.
It therefore makes sense for you the employer to insure against the unfortunate event of their untimely demise. Our Keyman Insurance helps your business recover from the loss of its valuable assets viz the persons who run it and/or own it.
Who is a 'Keyman'?
A Keyman is anyone who plays a key role in the company and especially those directly related to profit generation. People such as –
• Partnerships, Executive Chairman, Managing Directors, CEOs
• Head of sales and marketing
• Anyone who is a significant revenue generator
• IT and Finance directors
• The head of product development who also plays a major role in the company's overall innovation
Basically, anyone that's important to the company and plays a leading role is a keyman.
Keyman insurance, which comes under the umbrella of business protection insurance, is a policy designed to pay out an agreed cash sum if a key employee suddenly stops work due to death, permanent total disability or a critical illness.
If the policy pays out the proceeds go directly to the company and not to the individual, which is how it differs from a Life or Critical Illness policy. The sum insured is normally larger as well often running to millions if not more.
For many companies, Key Man insurance is a critical component of their business plan, as running a successful and forward-thinking business is as much about planning for the future as it is handling the day-to-day operations.
Depending on what type of Keyman policy was taken out the money can be used for a myriad of purposes, including;
• An injection of cash - Enables the company to buy time plus offer financial reassurance
• Shore up profits - Chances are a key person is directly responsible for some of the profits
• Cover the cost of temporary staff - Staff costs aren't cheap especially emergency ones
• Recruitment - The cost of recruiting senior personal can be extremely costly
• Repay company debt or an overdraft - Offers peace of mind, especially to your bankers
• Buy the deceased person's shares - Important as a significant shareholding can fall into the wrong hands. Most businesses insure their tangible assets but not their most important asset - their employees. And most tangible assets can easily be replaced, but people, or at least key people, can't be replaced quickly.
Types of Keyman Insurance
There are 3 main types of policies:
- Profit protection - Pays out a cash sum to help shore up profits. The money can also be used for training and recruitment purposes
- Corporate loan and overdraft protection - Pays out a cash sum for the specific purpose of repaying company debt. Very useful if the directors have personal guarantees or second mortgages in place
- Ownership Protection - Pays out a cash sum to be used to buy out the deceased (permanently and totally disabled or critically ill) director's or partner's shareholding
How do I get Started?
Keyman Policy Requirements
To enable the placement of a Keyman insurance cover Metropolitan Cannon Life will require the following information and/or documents: –
• Company Profile
• Members (Keyman) to be covered and amounts of cover per Keyman
• Financial Questionnaire completed by the organization involved
• Medical requirements will be subject to the group’s free cover limit