A policy taken on the life of an individual, whose death or permenent disability or would impact the organisation's ability to generate revenue and profits is known as KeyMan Insurance.
Loss of key individuals/partners of a business due to premature death or a serious illness may lead to severe financial setbacks. It could also be a potential threat to the survival of the organization.
Protecting such loss via Key-man insurance will enable the organization to mitigate losses, restore growth and goodwill.
How to select the right plan?
Leading Insurance companies in UAE like Zurich International Life, Friends Provident, Metlife, Salama and others offer the following plans, suiting different protections needs of a business;
- Jumbo Life Insurance
- Whole of Life Plans
- Level Term Plans( Term Insurance)
- Decreasing Terms Plans
Jumbo Life Insurance
Jumbo life insurance policies are designed for meeting the Legacy Planning and Business Protection needs of High Net worth and Ultra High Net-worth Business Owners / Partners / Directors.
The minimum cover amounts starts with US Dollar 10 Million and can go to 100+ million Dollars.
Such plans may involve premium financing and some companies offer a guaranteed return on the premiums invested.
Whole of Life Plans
A Whole of Life Plan offers flexible Whole of life cover with optional riders like Critical Illness Insurance.
It is particularly useful for Business Owners / Partners / Directors of less than 45 years of age, looking for a long cover term.
It is widely used to create the necessary cash-flows for buying out the shares of a deceased partner, allowing the surviving partners to continue the business without major interruptions in the event of death of one of the partners.
Level Term Plans or Term Insurance Plans
Term Insurance plans are cost effective and are ideal for short term protections needs, typically less than 25 years.
They are ideal for protecting business liabilities towards banks, creditors and other third parties.
Decreasing Terms Plans
Organizations widely use Decreasing term plans to cover term loans, which reduce every year. They are more cost effective than Level term policies, because the amount of cover decreases every year along with the outstanding loan amount.
Banks in UAE accept such policies as additional collateral, when extending a term loan to an organization.