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Employees are the most crucial asset to a company. Be it a small-scale or a large-scale industry, skilled employees are valuable to all. It is impossible for any kind of organization to work efficiently and grow without proficient labor. This necessitates the need for an organization to insure itself against any loss that might occur in case of the loss of such employees. This is where the Keyman Insurance policy comes to play.
Keyman policy is the policy wherein the employer is the proposer as well as the premium payer. The life insured under this policy is that of the employee but the compensation in case of the loss of the insured is paid to the employer.
Wondering what kind of losses can the death of an employee cause to the company? Here’s the answer:
If the company has the keyman insured, the sum insured is paid to the company on the death of the employee. The sum received by the company is quite large and sufficient for the company to easily and smoothly overcome any losses and also employ new executives as a replacement. In case the insured survives the tenure of insurance the company is not liable to receive any kind of compensation or sum insured.
A keyman can be any employee of the company with special skills and important responsibilities of the company. The employee to be insured under this policy should contribute significantly to the profits of the company and whose loss might cause a financial strain to the organization. For example, Directors of the company, key project managers, etc. can be considered as keymen.
The sum insured received against the policy can not only be used to hire and train new personnel but also for various other purposes too. It can be used to settle loans, offer salary continuation to the spouse of the lost, and also fund executive compensation plans.
Here are a few advantages of the policy: