This insurance ensures business continuity by protecting you from financial losses resulting from personnel attrition, operational disruption, and many unforeseen events. For example, in the event of a loss of critical persons (due to illness or accident resulting in total permanent disability or death, the insurance solution offers financial support to hire & train a successor, bolster investor confidence, buy-sell shares from deceased family etc to maneuver the many challenges faced by businesses who lose critical personnel that result in possible critical drop in revenues or income.
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In a situation where a key person dies, becomes disabled or retires, the business may have a sudden cashflow problem without the income brought in by that person, and may not be able to pay the monies to the key person’s family members and dependents.

Keyman insurance policies provide insurance against the loss of key personnel in an organization or company. These may include a director, chief executive officer or key employee. The money is normally paid to the business upon the loss of the key personnel under such a policy.
These can be further structured in ways to maximize tax efficiency, and better allow the business to carry on smoothly without being suddenly stuck with numerous liabilities when the key person is lost.
Premiums from keyman insurance policies can be paid from the company funds. Furthermore, the protection of such policies can be maximized by having the partners within the company to hold the policy in trust for one another, which we will elaborate upon next.
 
For example:
Albert is the founder of a successful start-up, which he spent his entire life developing. His business drew the support of a number of investors, who became minority shareholders in his private limited company. Unfortunately, Albert fell ill and passed on, leaving his widow Julia as the administrator of his estate and assets.
Julia has no experience with her late husband’s business and wishes to sell the shares belonging to Albert. The investors do not have enough funds or desire to buy over the shares. On the other hand, since the company is a private limited company, Julia is unable to sell the shares on the open market. The business of the company suffers badly as a result.

The above story is just one example of the many common problems that small to medium enterprises (SMEs) face.

Most owners of SMEs are often busy running their businesses and do not have time to worry about Key-Man and Estate Planning. However, this can create difficulties in the future, particularly because of the unpredictability of life and circumstances.

With a small amount of careful planning, many of these difficulties can be avoided.