Keyman Insurance
Anyone making a major contribution to company profitability is a Key Person, whether in the capacity as Director, salesperson or administrator. Should a Key Person have a prolonged disability or die it could have a serious effect on a company's profitability.
To cover the death risk a Keyman Insurance policy provides a sum assured that is payble on death of the Key Person to the company (life of another basis). The sum assured would be dependent on factors such as the costs of finding a replacement, training the replacement and the loss of business. The term of the policy is usually until the expected normal retirement date of the Key Person.
Alternatively, cover may be arranged on a Whole of Life basis (no fixed term to the policy). This is more relevant when the Key Person is the owner of the business.