Key Man Insurance
Key Man Insurance
- what is keyman insurance
- who can take it
- what are the benefits of it
- what are the rules of man insurance?
It is also known as Key Person Insurance, Key Woman Insurance or Business Life Insurance. Let us discuss it in detail
Key Man Insurance
A life insurance policy that a company buys on the life of your chief employee or executive is called Key Man Insurance. The company is the beneficiary of this insurance scheme and pays the insurance policy premium.
The loss of its chief executive can have a big negative impact on the company's operations so keyman insurance is required. Payments from the death of the executive are useful for the company to find a new person or to implement other strategies to save the business.
Who can take Keyman Insurance for whom is man insurance
In any small business, the main person can usually be the owner, founder or key employee of that company. The main qualification would be that the absence of the person can cause huge losses to the company. If so, the company should definitely consider Key Man Insurance.
How keyman insurance policy works
For key person insurance policies, the company buys a life insurance policy on its principal employee, pays the premium and the company is the beneficiary of the policy. In case of death, the company receives some assured. Using these money, the company can find a new employee, pay off the loan, pay the employees and systematically close the business.
Who should take Keyman Insurance should be taken for whom
To determine whether a business needs such coverage or not, company officials will have to see who is the person in the short term without whom the company cannot function. In many small businesses, it is the owner who does most of the work such as creating accounts, managing employees and handling key customers. If this person is not there, the business will be closed.
There may also be an employee who has specific technical skills and the company will suffer financially due to its absence. The following people may be eligible for keyman insurance mainly:
- Director of the company
- Principal Sales Manager
- Major Project Manager
- People with specific skills
Tax Saving on Keyman Insurance
Any company which is buying keyman insurance for its employee can claim deduction of premium paid for the policy as business expenses under Section 37(1) of the Income Tax Act. In a straight language, the company can put the premium on this policy in its expenses.
The premium given is not added to the income of the insured person. All claims of this insurance such as maturity, surrender value or death benefit received by the company are added to the taxable income of the company.
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