Every business has got to see the need for life insurance. If you aren’t already using Keyman Life Insurance, it is in your company’s best interests to take the time and read on. It could be time better spent than you think.
It is an old clich, but a true one nevertheless, that one of the most essential elements in the success of any business is the quality of people working within it. However much the nature of business life changes, this won’t.
When looking at small businesses this statement is never more true. The United Kingdom has over 4 million small businesses that have fewer that five people working within. It is also a fact that of all the businesses in the UK no fewer than 95% have less than 10 people working in them. These businesses should more than any be thinking of keyman insurance and more so key-man life insurance policies.
You will be only too aware of exactly who constitute your own key personnel- the ones who are driving your business forward; the ones, without whom, you would not only lose sales or profits but you could even risk losing the business itself.
It is for these people entirely that we have keyman insurance. Keyman insurance can essentially prevent the catastrophic meltdown that can happen when something happens to one of these people within the business, such as death or elongated absence.
This type of insurance is designed for you to sort out a contingency plan such as recruit a suitable replacement or even train someone up to take on their role and therefore maintain the business and its profits.
Without a doubt this is by far the most useful use that keyman can be put to, but it has to be said, not the only one. Let me explain, if a shareholder or business partner actually dies very soon their estate will come knocking at your door for their share of the company. If you actually consider this think when this happens will you have the funds to actually give them when they come calling? If not the business could be put into a critical position through no fault you yours or theirs. Well, it is for this reason that Keyman life insurance is so beneficial, key-man life insurance would essentially pay out and give you the funds to pay the estate and therefore discharge any claim they might have over the business.
In addition say for example you borrow money but in order to secure the funds you have to arrange a guarantor and this person dies. This could result in the bank calling in their loan, what effect would this have on your business? Again Key-man life insurance would come to the rescue and redeem the loan so the bank would no longer have an interest at all.
It is clear to see that all key-man insurance is, is life insurance the difference is the reason you arrange it and essentially where the funds actually go. In the typical life insurance route the funds would go to the beneficiaries, in a keyman scenario the funds are discharged to the company for them to do with what they want. If you are looking on the internet you will find that just about all life companies have some sort of provision for Keyman or key person insurance. In some cases you might find that you can even claim some tax relief on the contributions that are made to the plan but this should be checked with your professional advisers first as there are ramifications to doing this.
The fact is that for the security of your business - be it limited company, partnership, sole trader, or whatever - a Keyman life insurance policy will bring, at the very least, some peace of mind, but, possibly, it could help you face the nightmare of trying to replace the irreplaceable.
Keyman insurance should be important for any business. Make sure your business doesn’t suffer by having your key people protected with good Key Man Life insurance