Keyperson Insurance, also known as Keyman Insurance, protects the financial health of your business in the event of the disability or death of a key person. It is a means of business succession and business protection.
A key person can be described as someone who is directly associated with the business and whose loss could cause the business financial strain. This normally includes a business’ directors, partners, managers, sales people, or any person who may have a specific skill set. If this key person were to be injured or pass away, the business’ bottom line would suffer in the short term, and in the long term, the business would either need to find a replacement or worse case scenario, close down operations.
Keyperson Insurance can be beneficial in the following ways:
– hiring temporary personnel
– recruiting and training a replacement
– paying off debt
– protecting profits from lost sales
– protecting the interests of shareholders or other partners
– alleviating concerns of lenders
– reassuring customers, employees and investors that the business will continue operations
A Keyperson Insurance policy is normally owned by the business, with the policy proceeds being paid directly to the business as well. The term of the policy usually coincides with the period of time that the key person is working in or is useful to the business. The taxation of Keyperson Insurance can vary greatly, with the deduction of insurance premiums and taxation of benefits being highly dependent on the type of coverage and payout.
For more information on Keyperson Insurance or to obtain a competitive quote, please contact our Financial Advisor Lloyd Keating.
The Costen & Associates Team