Key man insurance UAE: 2020 Guide

Get Key man Insurance in Dubai from Lifecare International

Is your business insured?

Like your cars and home, key man insurance UAE is critical in order to ensure the sustainability of your business, irrespective of who comes or goes.

Undoubtedly, businesses are set up to make profit. This is why marketers are always on top of their game, looking for ways to boost business growth, since growth means more profit.

Anyone who knows their way around the business world understands the importance of protecting the interest of the business. You need a plan to ensure your business will survive any incident in the future. A plan that makes sure the business continues as usual despite the loss of any key member. And that is exactly what key man insurance UAE offers businesses like yours.

In this guide, we explain what key man insurance is and why your business needs key man insurance.

What is key man insurance?

True, businesses tend to employ multiple employees to ensure the smooth running of their daily activities. Nonetheless, there are some employees who provide more value to the business than others. They are known as a ‘key person’ or ‘key man’.

The profitability, decision making, and growth of any business is almost always dependent on a key person or key man (there may be several). This category of employee includes [but is not limited to] the founders, managing directors, CEOs, chairman, directors, and partners.

Knowing the important role these key men play in the longevity and growth of your company, it is paramount to have a backup plan in case one or more of these employees is suddenly ‘unavailable.’

Besides death, an employee could be critically injured which would leave him/her incapacitated and unable to perform their usual responsibilities. Now, imagine this unfortunate event happens to one or more of your key men, your business will inevitably suffer a huge loss that could lead to gross loss of profit, loss of customers and partners, or worse, liquidation.

Why allow the passing of an employee to crash your business when you can get a backup plan with key man insurance?

That’s right. Key man insurance is a type of life insurance leveraged by smart businesses to protect the company in case of the death or incapacitation of one or more of their key men.

Basically, the business partners in a firm pay a certain amount as insurance premium. In the event of death or incapacitation of the insured employee, the business gets a lump sum amount in cash to help keep it afloat. This protects everything from the partners to the profit, credibility, and longevity of the business.

How does key man insurance UAE work?

Like other insurance plans, the business pays a stipulated amount as premium and gets a lump-sum amount in the event of an incident.

For key man insurance, there are four basic categories of insurable losses.

  • Insurance to protect shareholders or partnership interest: With this insurance plan, shareholding and partnership interests of ‘unavailable’ key men can be bought by existing partners.
  • Insurance for those handling finances of the business: Should the key man involved in guaranteeing your loans and other bank activities pass away, this insurance ensures your business does not suffer, as it offers an arranged value that is equal to the value of the guarantee the business is receiving.
  • Insurance for unavailable key men: This comes in handy when a key man is unable to perform his duties for an extended period of time. This may be due to critical illness, accident, death, etc. The business gets support in cash to help mitigate the absence of the key man. This cash support can be utilised in finding and training a replacement or used as cash backup so the business doesn’t feel the impact of the key man’s absence.
  • Insurance to protect profit: This is to ensure the company gets a lump-sum amount to offset lost income resulting from lost sales and losses due to cancellation or delay of projects the key person was involved in. The lump-sum can also be used to offset debts due to loss of opportunity to expand, and loss of specialised skillset or expertise.

5 incredible benefits of key man insurance

1. Guarantees business longevity and credibility

The first and most important perk of having key man insurance UAE is the protection it offers. With key man insurance, rest assured your business will continue to thrive irrespective of the loss of a key man. It offers a backup plan that ensures you stay in business and continue to provide value to your client base. This goes a long way to boost trust among your partners and clients.

2. A route to protect and increase profit

Key man insurance is an additional route to get more profit. Instead of panicking and losing revenue after the demise of a key man, you get enough cash to replace the lost employee and still stay afloat. In the end, you have successfully protected your usual profit and even got a little more.

3. Good collateral

Your key man insurance can serve as collateral if you need an urgent loan for your business. With this insurance, you can seek to raise loans should the need for financial support arise.

4. Guaranteed skillset replacement

Getting someone who is both qualified and experienced enough to fill the shoes of a key person is definitely not an easy job. Besides the time demand, you are forced to spend a huge amount of time and money on the hiring and training process. This unforeseen expense could crash your business if you do not have sufficient savings. Key man insurance is a good substitute for those savings as it provides the required amount to see through the entire hiring and training process. So, your business is back on track without spending anything.

5. Protects and increases the valuation of a company

Key man insurance not only protects the valuation of your company but it also helps to increase it. Knowing that your company has a monetary backup puts a higher value on your company, should the company go up for sale.

Conclusion

Key man insurance UAE is an important part of any smart business. From protecting your profit to increasing its valuation and credibility, it is no wonder smart businesses are already leveraging this great opportunity. Protect your business today.

Ready to protect your business? Contact Lifecare International to learn more about key man insurance UAE.