Key person insurance plans are a type of life insurance plan for key employees in an organization. These plans ensure that if in case something happens to the key employee or if the key employee leaves the organization then the company doesn’t have to suffer due to this. Since this type of insurance plan is a business insurance plan, the beneficiary of this plan is the company that hires the key employee, this means that if in cases a claim has to be filed, then the company will get the compensation benefit from the insurer.
Why Purchase Key Person Insurance?
Keyman Insurance plans should be purchased by companies who are interested in protecting their own interests along with the interests of their employees. This type of insurance plan ensures that companies don’t suffer if the main employee with the most responsible role has to leave the job or is forced to leave the job due to health reasons. This type of insurance plan can make sure that other employees don’t suffer in such scenarios and that the main employee gets a severance package or compensation package if applicable.
Who should Purchase Key Person Insurance?
That type of insurance should be purchased by companies who depend on an important employee. This type of plan can also be beneficial to partners and sole enterprises. For large companies, the insurance plan can be purchased for an executive, senior officer, senior employee, principal shareholder or any other employee who is important to the company. For some companies, this type of insurance plan can be purchased for the owner, founder, partners or for a few key employees who are responsible for keeping the business operational.
5 Tips to Help You Purchase Key Person Insurance Plans
- Before purchasing key man insurance, you should review a few things so that you purchase an insurance plan for the right employee. The most important employees who are responsible for the success of the business are usually the best candidates for key man insurance. This type of insurance plan can not only be purchased for owners, sole traders, partners, important marketing executives, but also for people who keep the books, do taxes for your company, handle important clients or contribute significantly in keeping the company afloat.
- Key man insurance is not a type of personal life insurance plan, this type of plan is a type of business insurance plan. If you are interested in helping your employee and his family in case he is injured, ill or passes away then you should consider purchasing additional personal insurance plans such as term life covers, income insurance covers, total permanent disability covers and trauma insurance covers. If you are interested in protecting more than a few employees, then you may want to opt for group personal insurance plans or superannuation insurance plans to your employees.
- The minimum cover offered by most insurers in Australia for key person policies is $500,000. The maximum cover offered by most insurers in Australia for key person policies is $10 million. Before choosing a plan that offers the minimum or maximum cover, you should understand how much insurance your company needs. Remember, by purchasing a cheap cover with minimum benefits you can save money on premiums, but when it’s time to file a claim, you may realize that the compensation amount given is adequate to keep your company afloat.
- If you are interested in getting insurance advice to suit your company’s needs or if you need tax advice from an expert based on you current and future needs then you should consider hiring an expert to help you with your questions. While the internet provides answers to many insurance related questions, personalized advice can only be acquired by hiring an expert who will understand your needs before giving advice.
- Key man insurance plans can not only be purchased from insurer’s websites but also from insurance comparison websites. There are various benefits of choosing the services of an insurance comparison website such as instant quotes, free quotes, instant comparison service, free comparison services, quick help if you have questions and discounts, deals or promotional offers that can help you save money. Comparison websites offer help and guidance to buyers who want to purchase insurance plans from them, and if buyers need general help or guidance then they can contact the insurance company through a variety of methods. Most comparison websites offer help via the phone, clarify questions through email and also answer doubts about the policy through real time chat services offered on their website.
- Most buyers choose to purchase key man insurance plans online since this allows them to enjoy special online discounts, get help instantly and read FAQ articles while looking for a good plan. Purchasing a plan online is both easy and convenient, since this can be done from anywhere, while you are at home, at work or travelling out of the country. To purchase a plan online, all you need is a computer or a smart phone, an internet connection and answers to a few general questions that the insurer may ask you before they approve your insurance application. Insurance applications are usually approved within a week or faster when the policy is purchased online.
Key person insurance plans can ensure that if in case an important employee in the organization leaves his job, is critically ill, is disabled or passes away then the company doesn’t have to suffer due to the absence of this important employee. This type of insurance plan can benefit both the company and its employees by ensuring that the company gets a compensation payment from the insurer and that other employees are not adversely affected by the absence of the key employee. These plans can be purchased online through various types of insurance websites however; purchasing a plan from an insurance comparison websites can be beneficial for small businesses and medium businesses who want to purchase a good insurance plan on a budget.