Insurance

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Keyman Insurance Why is this insurance a must
have for business owners? Small and Medium
Enterprises (SMEs) i.e. businesses with a
turnover of less than AED 250 Million are the
backbone of Dubais economy, representing 95 of
all establishments in the Emirate. These SME
businesses account for 42 of the workforce and
contribute around 40 to the total value add
generated in Dubais economy.1 The power behind
this engine is the business owner/key
person. Defining Keyman Insurance It is the
dream, vision and risk-taking ability of the
owner that gives birth to the business and
through his hard work, it flourishes. Banks lend
to and suppliers work with the businesses because
of the ability of the owner/key person to make
profits and keep financial commitments. While a
business normally insures all its assets
(building/stocks etc.) However, it sometimes
forgets to insure is most valuable asset the
KEYMAN. Keyman could be the Founding Owner /
Director / Key Technical Personnel. Keyman
Insurance protects businesses from falling in the
hands of creditors/banks in the event of
untimely death of the key person. In such a
situation, insurance policy will pay off to the
creditors / banks and business can be passed on
to the next generation debt-free. Of course,
all loans are secured but if all assets (which
are under lien to the creditors/banks) go to
repay those liabilities, what remains for the
family? Keyman Insurance is the cheapest form of
ensuring that family / remaining shareholders get
business without any liabilities, market is
assured that it is business as usual and that
their funds are secured in CASH and not through
sale of assets. Cost of Keyman Insurance is
negligible and most organizations add it to the
cost of borrowing. How does Keyman Insurance
Work? For the Key Employee A company purchases a
life insurance policy on the key employee, pays
the premiums and is the beneficiary of the
policy. If that person unexpectedly dies, the
company receives the insurance payoff. The
purpose of Keyman insurance is to help the
company survive the blow of losing the person who
makes the business work. The company can use the
insurance proceeds for expenses until it can find
a replacement person. For the
Partnership Keyman Insurance in partnerships can
be used to stabilise business in the event of
death of a partner. Company insures all the
partners in the proportion of their share in the
firm. Company pays the premium. In the event of
death of a partner, insurance proceeds can be
used to pay deceased partners share in the
business and surviving partner inherits the
business. This arrangement avoids having to sell
off company assets to pay for deceased persons
share.
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Having Keyman Insurance is a very effective
arrangement as most of the organisations do not
have their assets in cash to take care of such
contingencies and moreover, surviving partners
may not wish to do business with deceased
partners spouse and vice versa. How we can help
you New Age Insurance Brokers is a
fully-licensed (by the U.A.E. Ministry of
Economy) insurance brokerage and represent many
local and international companies of repute. We
will assess your need and place your coverage in
the most cost-effective way. If warranted, we may
place business with one or more companies.