Do people still use keyman insurance? If so, how do you know when it is necessary?

I can't say I've seen it used for years. The concept is that certain people in the company are essential for the continuation of the company. If one of these people dies, the company would severely suffer or collapse. I would analyze your company and determine what the effect would be if one of your "key" people weren't there. Although I'm not sure it pays out if one of those people merely leave on their own!

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C.J.

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It really depends on what you are using keyman for there are four categories of loss for which Keyman Insurance can provide compensation:

1. Losses related to the extended period when a key person is unable to work, to provide temporary personnel and, if necessary to finance the recruitment and training of a replacement.
2. Insurance to protect profits. For example, offsetting lost income from lost sales, losses resulting from the delay or cancellation of any business project that the key person was involved in, loss of opportunity to expand, loss of spe******ed skills or knowledge.
3. Insurance to protect shareholders or partnership interests. Typically this is insurance to enable shareholdings or partnership interests to be purchased by existing shareholders or partners.
4. Insurance for anyone involved in guaranteeing businesses loans or banking facilities. The value of insurance cover is arranged to equal the value of the guarantee given by the key person.

I agree with the previous comment that it is not used as much as it use to be but in some cases you may find it irreplacable.

I wish someone would buy keyman insurance on me then I would know that I am important Seriously I think it is a good investment if you have one person that is that valuable however, a good business should not be run that way if it is a decent size.