Keyman Insurance Papers

Although there no such legitimate definition of Keyman insurance, it basically refers to covering the unforeseen events that the key employee comes across. The catch is that this benefit is enjoyed by the employee so long as he stays back in the company or is of any usefulness to the employer in the business operations. The actual objective of taking out the insurance is to compensate the employer for the loss of trading income that may result from the loss of the service of the key employee in case of death, sickness or injury.

Have you ever wondered how or why some employees stick to the company because of the benefits offered to them by the company? What are the benefits the employer gives his employees in order for them to stay back? This is where keyman insurance comes into play. Keyman insurance is also called as a key person insurance.

The Entrepreneur defines keyman insurance as, “Life insurance on a key employee, partner or proprietor on whom the continued successful operation of a business depends. The business is the beneficiary under the policy.”

Key person insurance is simply life insurance on the key person in a business operation. In a small business, this is usually the owner, the founders or perhaps one key employee or two. These are the people who are crucial to a business, the ones whose absence would sink …show more content…
A company purchases a life insurance policy on its key employee, and soon after that pays the premiums and is the beneficiary of the policy. If that person unexpectedly dies, the company receives the insurance payoff. The reason this coverage is important is because the death of a key person in a small company can have immediate impact on the company. Revenues may get affected, consecutive orders might stagnate and getting anyone else to fill in that position can become tough. The purpose of key person insurance is to help the company survive such an impact of losing the person who drives the