Insuring the life of a key executive can be vital for business continuity
If there is no plan to replace this key individual, the whole company could be at risk
Most small companies involve a key individual with the skills, knowledge and contacts that are key to the company's success. The question arises as to what happens if that person dies? The risk is that if there is no plan to replace this key individual, the whole company could be at risk. Replacing a highly skilled individual is not cheap, and normally entails poaching another skilled individual. Where will the company obtain the funds to do this? The solution The solution is to put in place what is known as a keyman structure. This will entail the company taking out a policy on the life of the key individual. This is the cheapest way to raise the cash to replace the key individual on their death or disability. The company will own the policy and pay the premiums. On the death or disability of the key individual, the company will receive the proceeds from the policy, which will enable it to recruit another key individual to replace the disabled or deceased one. Avoid estate duty As ...
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