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What is Keyman Insurance


Not many Small to Medium Enterprise business owners in Singapore know or understand what is Keyman Insurance and it’s purpose. Lack of understanding is mostly attributed by misunderstanding and stereotyping over what Keyman Insurance is about.


Keyman Insurance is simply to replace your loss of business revenue due to the sudden departure(either death or permanent incapacity) of your Key director or employee who is responsible for the company’s revenue growth. The insurance payout is to cover your revenue loss until the day you hire a replacement director or employee who is almost as capable. The amount of coverage needed is based on how many years of revenue loss you wish to cover. For example, if your business revenue is $5 million per year, and you need at least 3 years to hire someone to achieve that same target every year, you should purchase a $15 million Keyman Insurance coverage.


Another even more simple way to understand Keyman Insurance is to relate to why you buy Life Insurance in the first place. You buy Life Insurance to replace the loss of your income for your family and loved ones in the event of your demise. If your business is making money, you should also buy a Life Insurance for your business for the same reason.


Keyman Insurance is only for big companies. No it is not. Smaller businesses can also purchase Keyman Insurance. For smaller businesses, where the business owner himself is also the director of the company bringing in the business revenue, the business owner is the Keyman.


Keyman Insurance is a bet that your business will continue to grow and the only chance it does not is due to the sudden demise or permanent incapacity of the Keyman.