How to Insure Keyman

How to Insure a Keyman?

Where can I arrange Key Man Insurance?

A successful business owner generally knows that his or her business is only as good as the persons running it or responsible for many of the day to day operations.

These important people are referred to as a “key man” or “key person” and as the name implies, they hold the key to a business’s ongoing success.

What would happen to your business if you suddenly lost key personnel to death or injury? This is something you should carefully consider and if you feel your business would suffer significant financial losses, you can protect the financial stability of your firm with Key Man Life Insurance.

Two Types of Key Man Insurance

When you set about to discover how to insure a key man, you will soon learn that there are two very different types of cover.

One is like a basic life insurance cover policy that will pay benefits upon the death of a key employee named on the policy and the other is a key man disability insurance policy.

If the loss of a key employee will create significant financial loss for the company, you should consider both life and disability on that employee.

How to Insure a Keyman

Who Is the Beneficiary of a Key Man Insurance Policy?

Whilst that employee, manager, board member or other important personage may have a personal life insurance or disability insurance policy, that will be of no benefit to your company. Key Man Life Insurance is taken out by the business to cover business losses as a result of death or injury to the key man. In other words, the business is the beneficiary, not the key man or his family.

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Calculating How Much Cover to Purchase

Now that you’ve recognised the need to safeguard your business against the loss of a key person, it is important to calculate how much that loss may be in terms of lost productivity. For example, a top salesperson or a manager may be the person which clients deal with most. That employee may have most of the business contacts or may be responsible for running a department; perhaps even the entire establishment.

Losing that employee might bring the business to a virtual standstill until a replacement can be found and trained, so you would need to determine how long that would take and what kind of revenue would be lost during that period.

How Much Does Key Man Insurance Cost?

By this point you are probably wondering how much this type of cover will cost the business. Actually, prices will vary from company to company and the amount of cover you have will also factor into cost. At any rate, Key Man life insurance will cost pretty much the same as a personal life insurance policy which is also based on the face value of the policy. In other words, covering a key man for £100,000 will cost significantly more than covering him or her for £50,000. The same hold true for Key Man disability insurance. Cost will also vary amongst insurance underwriters so it pays to do some serious comparison shopping.

If you have a business and there are key people who are invaluable to your day to day operations, you should do everything in your power to safeguard your company with the appropriate Key Man Insurance policies.

Both Key Man life insurance and Key Man disability insurance can take the financial worries from you in the event of losing that key employee.
What it costs to carry Key Man Insurance is far less than your losses would be if you were suddenly without him or her. Compare quotes from several different companies and you will find the cover you need at prices which are affordable. The question is, can you afford to be without Key Man insurance?

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