A policy bought by some organization on the life of its key figure for example an executive director or manager, is called as Key man or woman life insurance. concern is the one which benefits from the policy in case of some mishap to the key figure. A company can’t survive if it loses its significant employees and every company has a set of such pillar bodies. An example of this would be a time tested sales manager, if your corporation loses him/her it can severely hit companies sales that you cannot bear. In case some accident occurs with your key man, will you be standing helpless? Key man life insurance is the ideal solution for such an unforeseen incident. Required stability during the tough time following the death or disability of key person is provided by such a policy. To develop the required replacements and to bear the loss, such policies provide space and time.
Corporation is the only recipient from the Key man life insurance as well as accountable for the payments of the policy premium. Sufficient amount is paid to the company as the payout for the policy that would allow it to search for replacement and train them or to adopt damage minimizing alternate plans. You can either grant the payout amount to the retiring employee or transfer it as life policy for some other key person. Sometimes people refer to Key man life insurance as company insurance plan. It also allows you to look for temporary damage-minimizing solutions. In small businesses the importance of key man life insurance policy is many a times great. Small businesses are usually run by only 1 or 2 effective teams. An unfortunate mishap with the leader of a team threatens to cease the entire setup. Small businesses are saved from such threats by Key man life insurance.
Key man life insurance policy is same as key person disability. It serves the purpose of providing stability in cases when a key figure is disabled to work suddenly. The cases covered by such policy include the accident and illness of the key person. An important mistake which is very common in company community is undermining the importance of disability insurance policy after they buy a Key man life insurance. Never undermine its importance as the research has shown that incident involving disabilities of key persons are more frequent than the death of the same. Buy-sell agreement is a similar policy that deals with the threats caused to the corporation by the dependence on single person. The rights of the top command of the business is protected by this legal document when any of the shareholder ceases to work. The ownership and smooth continuity of corporation is the basic purpose of this contract.
All round the world Key man life insurance is serving as a source of mental peace for the business owners. The realization of the ability their businesses now have; to absorb the shock of the loss of the priceless key person and still run smoothly has given them this peace of mind.
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