If you are looking for good keyman insurance that will help your business to pay off all the old debts and also that will help the company is paying for the production as well as the distribution of the products made by the company. If you are looking for the best critical illness insurance Singapore, then this article will help you to see whatever things you will need to save your business from any unexpected loss and help your company to grow more.
A key-person is that person in the company who is responsible for the smooth running as well as the main reason for which the company is making a profit due to their ideas and also the company is making their reputation grow in the market which is a good sign about how well they are making their business and also this reputation mark will indicate that the company is liable to pay off any big debts and also many companies will try to become partners in business so that they also can make some profit while working with your company and also their company will gain some more reputation for working with a big company.
How does the key person insurance work?
Company will purchase a key person insurance policy from either a bank or from a financial institution whichever is providing this type of insurance at a lower rate of interest and also the company will pay the premium on behalf of the insurance and is also the beneficiary of the policy so in case the key person dies then the whole amount of the insurance will be handed over to the company.
To check whether a company needs an insurance policy of this kind then the executives of the company should check which employee of the company is irreplaceable and also will check that due to which employee has the company been able to earn more profit as well as has been able to flourish so much into the field that they were currently working in.
If it is a small business then mostly the key person will be the owner of that company or will be the few employs which work there and due to whom the customers are still getting attracted to your business so the business owner will consider all the facts and then he will decide on whose name he will take the insurance policy on and pay the premium for.
How much money is needed is declared by the usually the company owner after he or she has themselves calculated the amount and are sure about the final figure that they have concluded to after multiplying the amount of total salary by five and also including all the profits made and then will ask for a quote from a different financial institution as well as banks.
What are the losses covered in this policy?
Here is the list of losses covered in this policy.
- It covers all the losses when to key person is not able to work as he is in a critical state on a hospital bed and he needs funds so that he can carry out his operation that can save his life from the particular disease.
- The amount of insurance money can also be used to protect the source of profit as well as all the losses that occurred during the loss of sales. Also, the losses occurred when you had to cancel any project that you were currently working on with the help of a key person.
- The money can also be used to protect the interest of shareholder as well as the stakeholders in the company and also they can be given interest from this money as all the rights go to the company if the key person is dead as the beneficiary of the policy is the company.
- This amount of money can also be used to pay for the expenses occurred when you were arranging for a bank or a financial institution to take a keyman insurance policy on behalf of the key person of the company, and usually, the company takes this loan to make the employee happy and at the same time also looks at making a profit.
What is the type of policies allowed to be bought as a keyman insurance policy?
You can take a different type of policy under the common heading of the policy of keyman insurance policy as you can take a life endowment policy, you can also take a term life insurance which will be taken only for a specific time period after which the money will be returned to the company or the insured person that is the key person of the company.
You also have to make sure that the period of the insurance policy is in line with the contract of the employee and also it should coincide with the retirement age of the employee, or else the employee will be out of the company on the basis of his or her age, and the money will be taken as the whole amount by the company which will work as profit for the company.
What is the taxation on insurance policy?
There are different rules as well as company restriction on taking this type of insurance called as a keyman insurance policy as this policy covers all the profit-making and also will pay for the losses occurred to the company in case the key person of the particular company dies either naturally or in an accident.
The keyman also has to pay the premium of the policy, but mainly the company has to pay the huge amount of premium as they have taken the policy on behalf of their employees and the employees have not requested them to take it.
The company which has taken the policy has to pay the income tax and that too at a normal rate that is something around 5 – 10%.