KEY MAN / KEY PERSONNEL" Insurance

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Key man Insurance Policy

Kotak Life Insurance :: Corporate ::

Key person Insurance, also commonly called key man Insurance and key man insurance, is an important form of business Insurance. There is no legal definition for "key person insurance".

In general, it can be described as an Insurance Policy taken out by a business to compensate that business for financial losses that would arise from the death or extended incapacity of an important member of the business.

As an Employee Reward / Employee Retention Program:

As an Employer what you can offer to your employees?

Or how can you motivate?

This concept of employer - employee Insurance scheme, is purely as an employee retention tool / reward for the benefit of the employee/s.
Better tax saving methods.

Higher Financial stability

Any number of the employees, either in small group Or preferred employees, or all Or in phases to cover employees, selection of employee, choice is yours.

To put it simply, Key man Insurance is a standard Life Insurance, TPD insurance or trauma insurance policy that is used for business succession or business protection purposes. The policy's term does not extend beyond the period of the key person's usefulness to the business.

Key man Insurance policies are usually owned by the business and the aim is to compensate the business for losses incurred with the loss of a key income generator and facilitate business continuity.

Key Person Insurance does not indemnify the actual losses incurred but compensates with a fixed monetary sum as specified on the insurance policy.
Many businesses have a key person who is responsible for the majority of profits, or has a unique and hard to replace skill set such as Intellectual Property that is vital to the organization.

An employer may take out a key person insurance policy on the life or health of any employee whose knowledge, work, or overall contribution is considered uniquely valuable to the company.

The employer does this to offset the costs (such as hiring temporary help or recruiting a successor) and losses (such as a decreased ability to transact business until successors are trained) which the employer is likely to suffer in the event of the loss of a key person.

Who can be a Key man?

Anybody with specialized skills, whose loss can cause a financial strain to the company are eligible for Key man Insurance.
For example, they could be:

• Directors of a Company
• Key Sales People
• Key Project Managers
• People with Specific Skills

Key man Insurance Policy ownership

Key man Insurance policies can be owned in a number of ways depending on the needs of the business. It is common for a business to own the policy with claim proceeds being paid directly to the business.

Advantages of key man insurance to the company:

• In case of death of a key man the company gets money to cope up with the loss
• Any company buying key man insurance for its employee can claim a deduction for the premium paid for the policy as a business expense under Section 37(1) of the Income Tax Act.
• No advance intimation/approval is necessary from the Income
• Key man Insurance policy is a positive measure to improve the retention of the key man in the company.

We have been handling Key man Insurance Policies, our clients include small, medium and large corporate / business house. We will be able to process your need too!

Feel free to contact us!