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There are three different types of keyman insurance for you to consider:
Keyman Life Insurance
This is the most basic type of key man insurance in that it is very similar to a standard life insurance policy but the nominated beneficiary is usually the company / business / board of directors / shareholders.
Should the keyman die then the insurance policy will pay out a lump sum of money. This is usually a term life insurance policy which will run for a set amount of years.
Keyman Critical Illness Cover
This will cover the company financially against an insured keyperson being diagnosed with or dying from a critical illness.
Again it will pay out a sum of money which can be used by the company to absorb any financial losses or drop in turnover whilst the keyperson is recovering or undergoing treatment.
The policy can even be used to pay for any specialist medical treatment should it be required.
Shareholder Protection
This is where a company insures all its shareholders or directors against death or critical illness.
sometimes when a shareholder or director dies, the shares are usually passed on to a family member.
It may be that this person cannot contribute to the business or they may be reckless.
Having Keyperson insurance will provide the needed funds to buy this person out and for just the remaining shareholders to remain in control over the company thus protecting its profits.
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