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The Significance of Key Man Insurance for Your Business by Chris Miller
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The Significance of Key Man Insurance for Your Business |
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Finance & Investment
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Key man in a business organization refers to a person who is of key importance or whose presence is critical for the smooth functioning of a business concern. It is not so that key man should be the CEO, COO, or any high profile person in the company; he/she could be any person who has the knowledge, experience, and genius to play an influential role in any of the significant business areas. A key man could be an HR manager, accounts manager, sales manager, marketing manager, project manager, and so. You might have got an idea what a key man is and what its importance is for a business organization. Suppose an organization cease to get its key man’s support due to death, severe illness, or permanent disability of such man; what would be the consequence of this event? The possible consequences would be that the organization suffer losses; its business would hamper; and, it would even collapse under pressure. Now, the question is that is there any way to avoid such a situation? Yes, there is a solution, and it’s popularly known as key man insurance. As the name suggests, key man insurance refers to the insurance of the key man of an organization. It is also known by the names key person insurance or key employee insurance. This is the insurance that is human life value based. It has been discussed above that the role of a key man is of critical importance in a business organization and his/her absence could result in huge losses to the organization. In such a scenario, key man insurance provides a cover for the monetary loss that an organization would suffer in the absence of its key person, or gives financial assistance for the expenses (like salaries of employees, returns to investors, operational costs, etc.) that an organization has to meet in times of adverse financial conditions. The significance of key man insurance for your business could be realized through the following points: • It provides protection against the monetary risk that arises when a key man leaves an organization. • It provides an organization with necessary funds to meet its important expenditures like employee wages, payment to shareholders, mortgage amount, etc., even in adverse financial conditions that arise owing to the key person leaving the organization. • A business organization has to look for the replacement of the key person lost; this task could prove very costly depending upon the business area the key person was seeing. The key person insurance also has provision of providing money for such an expense. • Key person insurance is very helpful particularly to small organizations because loss of a key man for such organizations would mean closure of the organization as well. Key person insurance is a strong ray of hope for such organizations because it provides them with the chance to recover and sustain. Big Biz Consociates is an established financial advisor and financial services firm. The firm provides various types of financial services like retirement planning, key man insurance, financial planning, mediclaim, mutual fund, bonds, etc. You may get more information about key man insurance and various other financial services at: http://www.bigbiz.co.in/.
Related Articles -
Human Life Value, Key Man Insurance,
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