Karan Singh Dhir, a Master’s in Business Administration (MBA) graduate of the Edinburgh Business School, UK has been a Senior Financial Adviser with Chartwell Associates Pte Ltd, Singapore since 2013 and previously a Financial Advisor with Global Eye Pte Ltd, Singapore since 2011. He recently joined Expat Insurance as a Life Insurance and Investment Products Specialist.
Key Man Insurance
Helps the business to recover from a loss of its valuable employee who is key in running the business successfully. Every business has few very valuable employees who contribute significantly to the running and growth of the company. It makes sense to insure their valuable employees for death as due to their death the company could face sudden financial losses.
Keyman insurance can be defined as an insurance policy where the proposer as well as the premium payer is the employer, the life to be insured is that of the same employer's key employee (Keyman) and the benefit, in case of a claim, goes to the employer. The `Keyman' here can be any employee, having a special skill set or substantial responsibilities, who contributes significantly to the profits of that organization. It is not a special plan of insurance but just application of life insurance for an employee.
For example
Mark is a managing director at Astro Pte a trading company based out of Singapore. Mark being a key man of the company Astro Pte gets a key man insurance on Mark for s$ 1,000,000 should he die. If Mark dies, the insurance company would pay Astro Pte s$1,000,000 which will help the company against the losses till they can find replacement for Mark.
Partnership Agreement
One of the biggest risk in partnership business is one of the partners may die and his business share might pass on to his spouse who might not be interested in the business. Equally a partner might get ill and want to exit the business.
By having a partnership protection agreement in place, it can make sure the other partner has the capital in place to buy out the partner share and the business runs smoothly. Partner protection agreement can be done through life insurance where both partner have life insurance against each other, and if one partner exits the life insurance proceeds can be used by other partner to buy out the business.
For example
Mark and Adrian own a partnership business. If Mark dies his share goes to his wife Jenny who is not interested in the business. By having partnership protection agreement in place, Adrian can buy Marks share of business from Jenny and make sure the business runs smoothly.
Group Life as Employment Benefit
Having a comprehensive employment benefits can help company retain its staff and potentially lead to lower turnover. Employees usually feel more secured in a job with protection benefits, where if the employee dies his loved ones are taken care off.
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