Key man insurance policy is a type of business key personnel insurance that protects a company from financial losses arising due to the death or disability of a critical employee or director. This corporate key person insurance ensures business continuity and stability during unexpected events.
Key man insurance provides financial protection and helps maintain business operations in case of unforeseen circumstances. A lender or an equity investor may also require you to buy key man insurance to protect their investment.
The company purchases a key man insurance policy on the life of a crucial employee or director. The business pays the premiums and is the beneficiary of the policy. If the insured key person dies or becomes disabled, the company receives the policy payout, which can be used to cover financial losses, recruit a replacement, or maintain business operations.
Inclusions:
Exclusions (may vary by policy):
Key man insurance provides financial stability during critical transitions. It ensures that your business can weather the storm of losing a critical team member, maintaining operations, and protecting your company's future. Key man insurance demonstrates foresight and responsibility to stakeholders, enhancing your business's credibility.
Edify specializes in creating tailored key man insurance policies. We help you determine the appropriate coverage amount, select relevant add-ons, and design a policy that aligns with your business structure and financial goals. Our expertise ensures that your key man insurance provides comprehensive protection while remaining cost-effective.
Key man insurance offers several tax advantages for businesses:
How Is The Sum Assured Chosen 
The sum assured is typically based on the key person’s economic value to the company. This can be calculated using factors such as the individual’s contribution to company profits, the cost of replacing them, and potential business losses in their absence.
Will Insurers Offer Sum Assured
Insurers carefully evaluate the proposed sum assured in relation to the key person’s role and value to the company. A disproportionately high coverage amount may be denied if it doesn’t align with the individual’s economic impact on the business.
How The Insurance is Underwritten
Underwriting for key man insurance involves assessing both the company’s and the key person’s financial status. This may require financial statements, tax returns, and details of the key person’s role and contributions. For high-value policies, a medical examination of the key person may also be required.
No, the company owns the policy and is the beneficiary. The key person does not have access to the policy benefits, as the purpose is to protect the business, not the individual.
Key man insurance is owned and paid for by the company, with the business as the beneficiary. Personal life insurance is owned by an individual, who chooses the beneficiaries and pays the premiums personally.
