In what other ways can keyman insurance be used?
Keyman Insurance is basically used to insure the lives of employees that the employee finds very valuable to the company. This insurance policy is very important for small scale businesses or family enterprises that depend heavily on certain individuals. These individuals are the power houses of the respective businesses, whose absence will make a major impact in the business. It is to insure these important assets of a company that keyman insurance policy has been rolled out.
The benefits of this insurance, upon claim, can be used to not to hire new employees but also secure or settle loans, which helps the company doesn’t face much financial burden and can ensure functioning with ease. This insurance policy also allows the company to make continued salary arrangements to the next of kin of the deceased.
Who can be insured under this policy?
Keyman Insurance policy is applicable to anybody within the company, irrespective of the designation or nature of work. This person is usually identified based on the skill sets he/she possesses, leadership qualities and how much he is bringing to the table.
Basically, keyman is a person who is an irreplaceable asset in the company and the absence of whom will have a major shake down on the functioning and income generation of the company. This way, the employer gets the benefit of either having a valuable employee in his service or enough financial aid to replace him or do the needful in the keyman’s absence. For example, a keyman could be anybody ranging from Directors of a Company to key project managers or even people with special talent and skill sets.
What are the basic eligibility criteria for Keyman Insurance?
Although the prospects of Keyman Insurance is beneficial and important, there are quite a few basic requirements for the person to be insured.
- The person to be insured should be a share holder of not more than 51% shares.
- The total sum of shares held by the keyman and his family should be more than 90% of the entire company shares.
- The company should produce documentation or some other form of proof to show the significance of the keyman in the company. This is done to prove that he actually is an irreplaceable asset in the company and he is important enough to be insured.