Another name for Keyman insurance is key person insurance. It can play a vital role in the survival of a business. Companies take key man policies to offset financial losses that arise as a result of incapacitation or death of a key person in the company. This person will be named in the policy. Aside from being compensated for losses, financial compensation enables the business to continue operating.

The life and/or health of any employee whose knowledge, contribution, or work is uniquely valuable to a company’s profitability can be covered. If the services of this person are suddenly lost, the company will face unanticipated expenses. Examples of such expenses are finding a successor, hiring a temporary stand-in, or loss of income until the successor is properly trained.

There are four options of key person coverage. The first is for losses suffered during the time when the key man is unable to work. In such a case, compensation covers the expenses for temporary staff and, if necessary, it will include finance to train the key person’s replacement.

The second category is profit protection cover. This covers lost revenue from lack of sales and losses suffered due to the cancellation or delay of business projects involving the key person. In addition, it covers the loss of expansion opportunities, knowledge, or specialized skills.

The third option is protection for shareholders‘ or partners‘ interests. This covers any losses experienced by them which occurred directly because of the key man’s absence. The 4th option offers coverage for any individual, lending, or banking facility that loaned money to the business. Coverage value is determined by the amount of collateral.

Keyman insurance cover does not necessarily have to cover an employee. It can apply to anyone associated with the business whose loss would cause financial stress. As an example, the person may be a project manager, partner, director, or any other person whose knowledge and skills are vital.

Every business with specialist employees should consider taking out keyman life insurance policies. To financially protect your company from unforseen losses speak to a finance expert at Yoursure.