A pay-out from the policy after the loss of a key person could help with the following situations:

- Loss of profits
- Having to recruit or train a replacement
- The loss of important personal or business contacts due to the key person not being there to maintain a contract
- Loss of goodwill which could have a direct impact on raising capital for the business or attracting new investors
- Customers and suppliers losing confidence in the business
- Outstanding loans

Keyman is a term used specifically for an important employee or executive who is core to the operation of the business and his or her death, disability or absence could prove to be disastrous for the company or organization.

Some businesses have excessive dependency on particular executives who are extremely important for the smooth functioning of the business. The absence of such key employees can cause huge losses.

For this reason, companies opt for a keyman insurance policy which provides safeguard against losses incurred due to sudden demise or disability of the 'keyman'. This type of policy is alternatively referred to as key person coverage, key employee coverage, etc.

The company or the business is the beneficiary in the event of loss and the premiums are paid by the same as a business expense. They come with a first to die option which enables the firm to insure a number of employees in the same policy and hence can be more economical compared to a standard life insurance policy.

If your business is growing, there is no right or wrong time to take out a key man or woman life insurance policy. A start-up company may be dependent on one or two individuals who are fundamental to the business’s success, whereas a larger company may have greater resources and the ability to substitute key staff with other personnel.

Established companies have larger overheads, so if the loss of one individual affects revenue, the consequences for the business could be serious. Every business is different, but key employee insurance can provide a safety net for your business.

It’s never nice to contemplate worst case scenarios, but the sad reality is that the loss of a key person in your business could have a severe impact. With a crucial member of the team absent, any business could suffer badly, with sales and profits falling and increased workloads for the remaining staff.
Key Person Protection is one way to safeguard your business against the death, terminal or critical illness of a key person in your organisation. It’s designed to pay out a lump sum on the death of the insured key person during the length of the policy, helping compensate for the loss of their skill, knowledge, experience or leadership.

This money could significantly help the business to recover; for example, the proceeds can be used to help replace lost revenue, or with finding and hiring a replacement.