What is Keyman Insurance?
Keyman Insurance (sometimes called Key Person Insurance) is a life insurance policy that a company purchases on the life of an essential partner, director, or employee
-
The company is the policy holder.
-
It pays the premiums.
-
In the event of a claim, the company receives the money.
👉 In short: It is not just insurance, but a crucial part of business Continuity Planning or Succession Planning
Why Keyman Insurance Matters?
Most businesses in the UAE are SMEs. Typically run by with one or more owners, partners, or shareholders who play a critical role in the company’s growth and operations.
More importantly, they provide strategic direction to the team and nurture strong relationships with vendors and clients and are bank-signatories, the foundation on which the business thrives.
If such a person is suddenly lost, the business can face immediate operational and financial challenges that affect employees, suppliers, clients, and even the partner’s family and legacy.
And the biggest impact is the loss of direction, a challenge that can threaten the very survival of the company.
Keyman Insurance provides a vital cash infusion when your business is most vulnerable — helping it withstand disruptions, protect continuity, preserve partner’s legacy, and safeguard everyone connected to the company.
With vs Without Keyman Insurance
5 Business Scenarios Where Keyman Insurance Becomes Essential
Keyman Insurance goes beyond protecting profits. It safeguards your ownership structure, loan obligations, personal assets, investor confidence, and even your long-term legacy.
Here are five real life scenarios where keyman insurance can be applied...
1. Partnership Protection
Partnership firms often have a buy/sell agreement — a legal contract that determines how a partner’s share is redistributed in the event of death, disability, or exit.
Keyman Insurance provides the funds needed to execute this agreement, allowing the surviving partners to buy out the deceased partner’s share smoothly and avoid ownership disputes.
2. Business Loan Protection
Many businesses take loans to grow or expand, and lenders often rely on the key individuals behind the business.
With Keyman Insurance, the payout covers outstanding borrowings if a key partner passes away or suffers a critical illness — protecting the company from default risk and maintaining lender confidence.
3. Personal Guarantee Protection
Owners, partners, and directors often give personal guarantees for business loans, putting their personal assets at risk.
Keyman Insurance shields your family’s wealth by covering these liabilities if the guarantor dies or becomes critically ill — ensuring financial security for the family while protecting business continuity.
4. Investor & Venture Capital Confidence
Startups and SMEs seeking funding from venture capitalists or angel investors often face one big question:"What happens if something happens to the founder or key people?"
Having Keyman Insurance in place reassures investors that the business can withstand disruptions, retain ownership, and continue operating even if a key decision-maker is lost — improving your funding prospects and valuation.
5. Succession & Legacy Planning
For family-owned businesses, a sudden loss of the founder or key family member can create leadership gaps, disputes, and financial stress.
Keyman Insurance ensures a smooth transition by providing the financial support needed to stabilize operations, hire leadership talent, and allow the next generation to take charge confidently — preserving both the business and the family’s legacy.
Types of Keyman Insurance Plans in UAE
Insurance companies in the UAE (Zurich, MetLife, Friends Provident, Salama, LIC International) offer various options:
-
Level Term Plans – cost-effective protection for a fixed term.
-
Decreasing Term Plans – ideal for covering loans that reduce each year.
-
Whole of Life Plans – long-term protection with optional riders (critical illness, disability).
-
Universal Life Insurance– for HNIs/UHNIs needing coverage of $5M or more, often used for legacy and business succession planning.
👉 Read more: Keyman Insurance in Dubai for SMEs
Protecting Profits, People, and Legacy
Andrew Carnegie once said: “Men and women, not machines, are the real source of profits in any business.”
In the UAE, where partnerships and SMEs power the economy, protecting those key people is not optional — it’s essential.
With Keyman Insurance, you’re not just protecting a balance sheet. You’re securing your company’s continuity, your partner’s legacy, and the financial security of employees, suppliers, and families.
"For over 13 years, I’ve helped several UAE businesses secure continuity with Keyman Insurance.
Businesses that plan ahead with Keyman Insurance bounce back faster, protect their people, and preserve continuity. Those without a safety net often face chaos, stalled growth, or even closure.
Frequently Asked Questions
Who should get keyman insurance?
Commonly covered key individuals include:
-
-
Owners, partners, and shareholding Directors
-
CEOs, CFOs, COOs, and other top management
-
Employees managing high-value client accounts or supplier relationships
-
Key signatories handling financial and banking approvals
-
Is Keyman Insurance expensive?
Keyman Insurance is very affordable, typically the annual premium is much less than 1.00%(one percent) of the cover amount. Depending on the age, lifestyle, and health condition of the insured, it can be higher or lower as well.
What is the typical term of the cover of Keyman Insurance policy?
The term of the policy depends on various factors like the age of the key person/Partners and the personal choice of the stakeholders of the company.
It can be availed for a term between 5 years and the whole life of the insured.
What is the use of Keyman Insurance?
The Insurance proceeds are typically used for the following;
- Pay off the liabilities of the firm to banks, suppliers, and other debtors to ensure adequate liquidity in the business
- To buy out the shares of the deceased partner without affecting the business cash flows
- To mitigate the loss of revenue/profits due to the Death or Critical illness of a Key person or Partner.
How long does it take for a payout in the event of a claim?
It usually takes 1 - 4 weeks working weeks after submission of the claims form and the relevant documents to process and payout a claim.
Can the company pay the premiums, and are they tax-deductible?
Yes. In the UAE, companies usually pay the premiums, and they can be recorded as business expenses, helping reduce taxable profits where applicable. Please consult your tax advisor for specific guidance.
How is the sum assured decided for Keyman Insurance?
There are three common approaches:
-
Profit Multiple Method – 5 to 10 times the key person’s contribution to annual profits.
-
Turnover Method – A percentage of company revenue (commonly 2 to 5%).
-
Liability Cover Method – Based on outstanding loans and financial obligations.
Can the cover include Critical Illness benefits?
Absolutely. You can opt for Keyman policies that cover both death and critical illnesses like cancer, heart attack, or stroke. This ensures business continuity even if the key person survives but is unable to work.