Keyman Insurance Policy – A detailed guide on benefits and eligibility criteria for keyman insurance


5 min read

Table of Contents

Keyman insurance is an important form of business insurance where protection is offered by employers to key employees to safeguard them from unforeseen events. Let us get details of keyman meaning.

Insurance plans safeguard individuals or families from sudden events like accidents, illness, death etc. There are various types of insurances with varying features that offer coverage to individuals and groups to secure them against financial crunches. However, it is important to understand such plans before purchasing them because there are many minute details which are involved and which you should know.

Like individual and family insurance policies,  plans are also available for businesses and groups to cover employees and their needs. As such, no organization can thrive without their employees. And so, it becomes the responsibility of the organization to protect them from unforeseen events. There are many insurance plans that allow employers or businesses to cover their employees under the right plan against untimely deaths or unfortunate incidents. All they need is to research well and buy the best plan to suit the requirements of the organization and their employees. One such type of insurance is the keyman insurance plan, which we are discussing in this blog.

PayBima Khushi Ka Tohfa

What do You Mean by Keyman Insurance Policy?

A keyman insurance is a plan that is purchased by the employer of a company or business for their employees. In this case, the proposer and the premium payer of the policy is the employer and the insured person is the employee. So, a key man policy is ideally meant for an organization who want to secure the lives of their employees against the risk of unexpected incidents, accidents or death. Under this plan, the employer proposes the policy as well as pays the premium to secure their employees from risks. Hence, the life insured under these plans are the employees, while the benefit of claims goes to the employer. So, in case there is a death of an employee that takes place during the tenure of the policy, the death benefit will go to the employer. The employer, on its part, compensates the family of the employee so that they can manage their burdens accordingly.

However, it is necessary for employers to know keyman insurance meaning and the terms and conditions of such plans well before investing their money.

How Key Man Insurance Can Help Protect Life of a Business?

8 Benefits of the Keyman Insurance Plan

Below are some benefits of the keyman insurance plans:

  1. These policies help businesses to overcome monetary loss in the event of a premature demise of a key employee of the organization
  2. The plans allow coverage to the family of the deceased employee by taking care of their essential monetary needs
  3. These policies support the morale of key employees in an organization and takes care of their family’s requirements to allow them mental peace
  4. Also, under keyman insurance policy taxability option, employers can seek tax rebates under these plans as the premium paid under this insurance type comes under the category of business expenses on which the insured can claim tax rebates
  5. They further improve the value of a business, especially during the times of business expansions
  6. The keyman insurance also allow steadiness of shares of a company in the event of demise of a key employee
  7. It further improve the credit of a company which might be affected due to the death of a key employee
  8. Having keyman insurance supports in meeting liabilities and avoid financial crisis

Eligibility Criteria Required for Keyman Insurance

Below are the requirements needed at the time of buying keyman insurance:

  1. The first criteria is that the key employee should have below 51% stakes in an organization where the person is working.
  2. The second criteria requires that the key employee and his/her family must hold below 70% shares of the business.
  3. The organization must prove to the insurer that the roles performed by the key employee is significant and critical for the organization.

4 Key Considerations before Buying Keyman Insurance

  1. You must note that under keyman insurance the employer cannot select rider option
  2. Under such plans, the employer is not just the nominee but also the policyholder
  3. Keyman insurance plans do not allow the insured to take loans under the policy
  4. Here, the employer makes the payment of the premiums after considering the coverage for employees

How to Calculate the Premium amount of Keyman Insurance?

To calculate the premium of a key man insurance plan, employers can use a keyman insurance premium calculator online. Calculating the amount will help employers to choose the right policy and take the right decision at the time of investing money under such plans.  To calculate premium amounts with high accuracy, the employer is required to enter proper details, which is used by the calculator to calculate the value.

What will happen to the plan if a key employee quits the company?

  • If an employee or keyman quits an organization, the employer can stop making payment of the premiums and let the policy lapse.
  • Also, they can come to a mutual agreement with the insurer to transfer the policy to the new employer whom the employee is joining.
  • Further, the company can assign the policy in favor of the keyman or the key employee.

Read More: Defining Survival Benefit in Term Life Insurance Policy

To conclude

Now you know the keyman insurance policy meaning and you also know that it serves multiple purposes to a company. But, it is important to consider everything before buying a keyman insurance online to save time and money for the employer. Further, this will help you to know which of the losses are covered under keyman insurance  by means of comparison.

However, the employer should understand the purpose of buying the keyman insurance before investing the amount. Further, they should be well versed with the terms and conditions of the policy as different insurers might have different terms of the policy.  Thus, the employer should assess and compare the various available plans online.

Found this post informational? Browse PayBima Blogs to read interesting posts related to Health Insurance, Car Insurance, Bike Insurance, Term Life Insurance and Investment section. You can visit PayBima to Buy Insurance Online.



View this post on Instagram


A post shared by paybima (@paybima)

Nov 01, 2022
Author Bio
Author Image

PayBima Team
PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.

Related Blogs

Would love to hear from you

Share your candid feedback. Your email address won’t be published, we promise!

All fields are required

Find your suitable insurance plan

Speak to our advisor

Latest Posts

Mahindra Insurance Brokers Limited (A Mahindra Group Company) - Unit-202, A-Wing, 2nd Floor, Amiti Building, Agastya Corporate Park, Kamani Junction, LBS Marg, Kurla West, Mumbai - 400070. Tel: +91 22 66423800

Licenced by IRDAI License No. 261; License Validity : 17-05-2025; Category : Composite Broker; CIN : U65990MH1987PLCO42609 Member of Insurance Brokers Association of India (IBAI).

Insurance is the subject matter of solicitation.

For a seamless experience, use the latest version of Chrome/Firefox/Internet Explorer.

Copyright © 2024 Mahindra Insurance Brokers. All Right Reserved.

Get A Call Back
Get A Call Back