Ask any business owner out there if he has purchased insurance and the answer would be YES. Running a business requires the business owner to purchase insurance; some of them mandatory by law or by contract and some are optional. The ones mandatory by law include motor insurance and foreign workers insurance. The contractual types may include fire and public liability insurance when the owner sign a tenancy agreement.
There are also some solutions that cover different aspects such as Property All Risks, Business Interruption, Machinery Breakdown, Cyber Security and even Burglary. You might be thinking: Why would any discerning business owner choose to fork out more for optional coverage? The answer is simple – it is to protect the company from loss of profit arising from the occurrence of the insured event. For example, a fire could break out and the office might be destroyed, or a cyber-attack and hardware breakdown could occur and cause severe business disruption.
Beyond the material things that require protection, have you given thought to the importance of protecting the other most valuable ‘asset’, which is the key person that ensure the success of your company? Keyman Insurance is designed to help you do that.
First, we need to understand who is the Keyman?
A Keyman is essentially a person in your company who plays an instrumental part in the smooth running of the company to ensure success. The Keyman possesses unique qualifications and abilities that are difficult to replace, and his death or total and permanent disability will result in the company suffering operationally and financially.
A Keyman is someone who:
- Is responsible for a huge portion of your company’s income;
- Steers the direction of your company;
- Possesses unique skills, know-how, technical knowledge, expertise, experience, qualifications or abilities that are difficult to replace;
- Is partly or entirely responsible for the profitability of your company; and
- Is challenging or expensive to replace.
Hence, having Keyman Protection will insure your company against the adverse effects arising from the loss of a Keyman such as decrease in sales and income, and loss of customer confidence.
It provides your company with a financial cushion to tide over the period when the Keyman is absent, and buys the company time to search for and train a suitable replacement. It ensures a smooth transition from the time that a Keyman departs from the company to the time that his replacement is found, properly trained and ready to take over.
Keyman Protection helps the company in the following ways:
- It protects the business from the impact of a sudden decrease in sales and revenue.
- It replaces the decrease in sales and income during the period of absence of the keyman, or up to the period a replacement is found, trained, and is able to contribute to the profitability of the business.
- It provides funds to find, hire and train the replacement, as well as integrate him into the business.
- With proper planning, it provides the necessary funds to restructure a company.
After all’s been said, let’s sum up all the various benefits that Keyman Insurance can bring to the company:
- Employee confidence and loyalty stays strong.
- Customer confidence is not affected.
- Employees are convinced that the company is keen and sincere to maintain business continuity and sustainability.
- Business associates are convinced of the company’s keen interest in maintaining business relationships.
- The business is able to retain its credit lines. Banks and lending institutions cannot cut credit lines or request payment of loans from companies without good reason. Also, they will not do so for companies with strong financial backing who have shown the ability to maintain smooth business transition.
- Debtor and creditor relationships can be maintained.
- The company’s reputation remains strong.
- The interest of the company in general is protected. There will be little interruption to the overall direction of the company.
- The proceeds from Keyman Protection can assist in ensuring smooth and uninterrupted cash flow. Bills can be paid, liabilities can be cleared and loans can be repaid. Purchases can continue; growth and expansion plans need not be halted.
The story of the golden goose is a familiar one; it is a magical creature that produces and lays gold eggs every day. Would it be better to insure the eggs or the golden goose? Business owners should make a wise decision to insure the golden goose – the Keyman of the company – to ensure they continue to collect plenty of gold eggs.
To learn more, do connect with our team to find out how you can protect your business.Share on Facebook Share on LinkedIn Share