What is it?
Life assurance owned by a private company insuring the life of a key person in the firm who is not a shareholder.
Many small businesses rely heavily on the skills or technical expertise of a single person. Where the person is a shareholder, the firm would normally use shareholder protection. However, sometimes the key person is not a shareholder and so a different arrangement would be needed.
What Benefit Does It Provide?
The keyman insurance provides the company with a sum of money to support itself whilst it either restructures, searches for a replacement or re-skills existing employees.
Typically, keyman insurance is based on either a multiple of the key-person’s income or a multiple of their contribution towards company profits.
Of course, key personnel can be insured for against serious illnesses which prevent them from undertaking their work as well as death.
What Should I Do Next?
Please contact us to discuss shareholder protection schemes.