Who does not know about life insurance in India? Almost all of us are acquainted with life insurance policy, health insurance policy, travel insurance policy and so many more. However, only a very few people know about the meaning of keyman insurance policy and how it works. For some people, the term keyman insurance is totally unfamiliar.
What is the meaning of keyman insurance policy?
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Keyman insurance is a special type of policy where both the proposer and the premium payer is the employer. Whose life is to be insured under this insurance policy, is the key employee or keyman. In such insurance policies, the claimed benefits directly credited to the employer. Here the keyman must have some special skill to contribute his or her considerable responsibility to the profit of that organization. This kind of insurances is just usual life insurance policy but it actually made to fulfill some special need of the employer and the company.
The sole purpose of Keyman insurance policy India is to give proper coverage for the life of a Keyman or key employer for a financial value. Thus for a premature death of a Keyman, the damage to the security is recovered with economic support given to the survivor by the insurance policy company. Here the ‘keyman’ is the key to the business’ accomplishment as the name suggests it clearly. One of the most beneficial sides of this insurance policy that if one wants then he is allowed to another person or persons in a single company. Keyman also has the permission to add a key woman in the company.
How does keyman insurance policy work?
Keymen insurance policy is actually a kind of business insurance which has no legal definition. In this policy the company offers compensation over the death of an important person of the business. It works as a group life insurance.
It is to make security against the disastrous event such as the policy holder’s premature death. Since the company may face occupational or any kind of vital monetary loss due to the sudden death of such treasured personnel. Thus here is the keyman insurance policy originates into play and helps you out in your need. The main motto of the keyman insurance policy India is to give its policy holder great coverage to the life of Key men (or key women) for a pecuniary value. So in case of such premature death of the Keyman or keymen, the loss to the company or business is recovered.
There are several times it happens that a keymen quits the job and in his or her place another key person joins the business or company. In such cases there are a few options. These options are as follows:
- In such cases, it may still continue to pay the payments and bring together the profits on a claim ascending.
- It also can be allocated in favor of the keyman or the life insured person.
- The first employer or the first company in which the employer used to work earlier can stop paying the payments and thus allow the policy holder to lapse the policy if he or she wants.
- Even there is an option of relocating the policy to the new employer of the Keyman if both the company agreed for the condition.
What are the eligibility criteria of the keyman insurance policy?
There are a few eligibility criteria for the keyman insurance policy. Here is the list of such criteria’s for you. Check it out.
- Such policies need some proof of the person or persons especially of the Keyman who plays a vital role in the business or in the company.
- The keyman and his family together should possess less than 70% of the company’s entire share amount.
- The keyman has to hold less than 51% of the business’s stocks.
- The full amount guaranteed for Keyman insurance must be lower
- The keyman’s annual compensation package must be 10 times lower.
- The keyman could have 3 times of the average uncultured income of the company for the previous 3 years.
- The keyman can have 5 times of the gross average earnings for the previous 3 years.
- Keyman insurance policy is generally not delivered if a business’s income or revenue is decreasing day by day, or if the business is facing a high rate of loss continuously.
The payments that are paid to the policy will be treated as occupational expenditures and the business would save up to 30% plus supplement on every premium that is paid for the keyman insurance policy.
One can get such life insurance for all their staffs with group life cover. Thus one can provide some monetary safety to all their both the employee and the employees’ families.
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