Financial Protection
Protects the business from financial losses due to the death or disability of crucial employees.
Talent Retention
Demonstrates company commitment to key employees, boosting morale and retention.
Attract Investors
Shows investors that the business has protection against key person risks, increasing confidence.
Business Continuity
Ensures business operations can continue smoothly even after losing a key person.
Recruitment Costs
Covers expenses for recruiting and training replacement personnel.
Debt Management
Helps manage business debts and obligations during transition periods.
Directors of Company
Senior executives and board members who make strategic decisions.
Key Sales People
Top performers who generate significant revenue for the company.
Key Project Managers
Managers overseeing critical projects essential to business success.
Employees with Specific Skills
Specialists with unique expertise that's difficult to replace.
For Companies:
Premiums paid for Keyman Insurance are considered a business expense and are deductible under Section 37(1) of the Income Tax Act. However, claim proceeds are taxable as business income.
For Employees:
Since neither the premium is paid by the employees nor the proceeds come to them, there are no tax implications for these members under this insurance.
Intimation
Notify the insurance company immediately about the death of the key person.Submit Documents
Provide policy copy, death certificate, claim form, company documents, and other required papers.Claim Assessment
Insurance company inspects documents and processes the claim if found admissible.Payment
Claim amount is disbursed to the company after successful verification.Policy Lapse
The company may choose to stop paying the premium and let the policy lapse.
Transfer to New Employer
The policy may be transferred to the new employer on mutually agreed terms.
Policy Assignment to Employee
The policy may be assigned to the key employee with mutual consent.
Age of the Key Person
Younger individuals generally have lower premiums.
Health Condition
Good health results in lower premiums; medical examinations are required.
Occupation and Role
Higher-risk roles may attract higher premiums.
Sum Assured
Higher coverage amounts result in higher premiums.
Term of the Policy
The duration of the policy affects the premium structure.
Company Financials
Strong financial health of the company can lead to favorable premium rates.
Coverage Amount Formula
Based on salary multiples or profit multiples, with the lowest value typically taken.
Additional Riders
Adding supplementary benefits increases the premium.
The term of Keyman Insurance typically ranges from 1 to 15 years, depending on the agreement between the company and the insurer. Many policies offer renewal options. The term should align with the key person's role and the company's strategic plans.
Assess Key Person's Role
Determine the critical duration of their contribution.
Align with Business Objectives
Match the term with long-term goals.
Evaluate Financial Stability
Choose a term that fits financial health.
Plan for Succession
Ensure the term covers transition periods.
Consult Advisors
Seek professional advice.
Review Renewal Options
Opt for flexibility in renewal.
Consider Age and Health
Factor in key person's age and health.
Cost-Benefit Analysis
Ensure premiums fit the budget.
Voluntary Support:
The company can voluntarily choose to use the insurance payout to support the deceased employee's family. This can be seen as a goodwill gesture and can help maintain morale among other employees.
Policy Structure:
Some Keyman Insurance policies can be structured to include a benefit for the family of the deceased. This would need to be specified when setting up the policy.
Legal Considerations:
It's important to consider the legal and tax implications of transferring insurance proceeds to the family. Consulting with legal and tax advisors is recommended to ensure compliance with relevant laws and regulations.
Financial Protection
Comprehensive protection against financial losses from losing key personnel.Talent Retention
Demonstrates company commitment to key employees, improving retention rates.Attract Investors
Increases investor confidence by showing protection against key person risks.Ready to Protect Your Business?
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