Do You Need Keyman Insurance?
Is a business just about driving profit and expansion, increasing headcount and delivering services, while not even considering protecting such an important commodity? You’ve worked hard to make your SME flourish. It’s your lifeblood. You want to be able to protect that business, regardless of what happens to you.
Many, if not most of the Singaporeans, know what is life insurance, and most probably already have a policy or two. And so it is to protect a family's breadwinner in case of his demise. What about keyman insurance in this case? Do you really need it for your business?
How Important Is Keyman Insurance To An SME?
As a business owner in Singapore, you have so many things to do and it seems like you spend all your time working on the urgent stuff--getting your product or service even better, hiring people, figuring out how to increase revenues, paying the bills and so on. It's hard to find the time to consider something that isn't really urgent but that can be incredibly important, specifically, keyman insurance.
Simply speaking, it is to insure the life of the key person in a business, which is usually the owner, the founders, or perhaps a key employee or two. These are the people who are crucial to a business--the ones whose absence would sink the company. You need key man insurance on those people!
A company purchases a life insurance policy on the key employee, who pays the premiums and is the beneficiary of the policy. If that person unexpectedly dies, the company receives the insurance payoff.
The reason this coverage is important is that the death of a key person in a small company often causes the immediate death of that company. It will be like the pillar of your HDB flat being suddenly removed! It will help the company survive the blow of losing the person who makes the business work, and hopefully enough to sustain the company from falling until they are able to find the next suitable person to be a keyman. The company can use the proceeds for expenses like paying off debts, distribute money to investors, pay severance to employees, and close the business down in an orderly manner. In a tragic situation, key man insurance gives the company some options other than immediate bankruptcy.
If the company is just a one-man show or doesn't have any employees and other people who depend on it, then keyman insurance may not be as necessary.
Keyman insurance would not be beneficial to every business, but the owners will want to learn more about this insurance coverage to discern whether or not their companies fall under the category of those that would benefit from purchasing a key man insurance policy.
Don’t wait any longer to get the key man insurance that your business and family deserve. You can’t predict the future, which means that you never know what’s going to happen tomorrow.