Keyman insurance - what you need to know.

In my discussions with business owners they all have personal life insurance to protect their families from financial ruin but when we discuss keyman insurance I'm usually met with a mindset of it's nice to have but we can look at that later. In 2020 I decided that I am no longer going to allow my clients that are business owners to ignore the importance of adding Keyman insurance to their company's portfolio.

Keyman insurance can mean the difference between your business collapsing and rising like a phoenix from the ashes after the loss of a very important employee. The proceeds from this insurance can be the much needed capital injection needed to sustain the company during a time of loss.

When you start a business the first step is to generate revenue with the intent to make a profit. When your company becomes profitable you now seek a higher level of banking, legal advice and of course, the necessary insurances. Keyman insurance is the one plan that helps you protect the wealth that you have created. Imagine the financial impact of losing a key salesperson or key manager - imagine the impact on your cash flow. This negative impact can be balanced off and even completely covered with room to spare with the right amount of Keyman insurance.

Why Keyman insurance? If you were asked what are your company's most valuable assets the answer won't be the assets with the high values on the balance sheet but it would be the assets that can generate income and bring continuous revenue into your company and this is your human resource, your 'key' persons in the company.

Not every company has the ability to build cash reserves large enough to cover the cost of losing a key employee and this is why Keyman insurance is often the more affordable option to transfer the risk attached to losing a key person. Keyman insurance is the one method that guarantees a certain payout in the event of the death of a key person.

Let's summarise the benefits of Keyman insurance:

• Provides protection against the financial loss from the death of a key employee
• Premiums paid are treated as a business expense
• Proceeds can be used to repay debt or used to collaterise new lines of credit
• Proceeds are tax free to the company
• Can protect the value of the company. This may be useful if owners contemplate selling the company after the loss of a key employee.

If you are a business owner, you have the option to do US Dollar Keyman insurance or TT Dollar Keyman insurance. Most of my clients have been moving towards US Dollar Keyman insurance as it ensures an injection of US Dollars into the company in the event of the loss of a key person. Message or call 713-9403 if you'd like to learn more.