Keyman
Insurance
A Business firm may face huge financial losses in event of un�mely death
of key valuable employees
Keyman Insurance safeguard’s the business firm from Financial Losses
occurring due to un�mely death of key employees
Keyman Insurance is a Term cover policy proposed by an
employer on the life of its key employees.
Features of Key-man Insurance
Assurance of business con�nuity in the event of
unfortunate death of the key person
Claim on the death of the Key employee is received
by the company / firm
Tax benefit to business firm on premiums paid under
sec 37(1) of IT act
Benefits of Key-man Insurance
Protec�on against Only term plans The premium paid
business risk in the allowed will be treated as
event of business expenses
unfortunate death under sec 37(1) of
of the key person IT act*
This training material should be used only for internal trainings and should not be used in parts or as whole for solicitation.
Eligibility criteria Key man Insurance:
• The 'key-man' should hold less than 51% of the company's shares
• The total number of shares of the company held by the Keyman and his family
Shareholding together should be less than 70% of the company's shares. Family Includes Spouse
and Minor Child
• All policies of Key Man ( individual, EEIS, Keman etc) will be taken into considera�on
Financial • Financial assessment for Key Man Cover: Higher of
Underwriting • a) Average Directors remunera�on / Salary received from company x 10 OR
• b) Average Gross profit x 3 �mes x shareholding OR
Financial TASA • c) Average Net profit a�er tax +30% Avg Deprecia�on) x 5 �mes x shareholding
minus (exis�ng and simultaneously applied Key person cover in the name of
and Eligibility company)
• If company has incurred losses in the latest year or last two year, no KMI cover to be
considered
All Keyman cover, EEIS and individual cover ( term plans only) issued in last 2 years
Medicals SUC needs to be added for SUC
• Only Term plans ( SPG) variant 1 and 4 ( RoP not allowed);
Plans Allowed • Riders are Not allowed
Documents required
• Proof of Employment / shareholding and role in the en�ty To
Prove Life Assured is a key man
- Form 16 for last 2 years/ Bank statement of 6 months with
Key Man‘s salary credits
- Proof of remunera�on from en�ty
Documents • Income Proof: Eligibility under Key Man Insurance
- Latest 3 years Form 16 and ITRs with Computa�on of Income
• Key Man Profile Jus�fica�on
- Role of Key man in the company
• KYC of business:
- Memorandum and Ar�cles of associa�on and
Employer’s - Company Registra�on Cer�ficate
documents • Shareholding pa�ern: Latest shareholding pa�ern
• Board Resolu�on
• Audited accounts of company to establish Financial standing of
the company
- Audited balance Sheet and Profit and loss account for last 3
years
• ITRs of Company to establish Profitability of company
- Last 3 years ITRs with Computa�on
• KYC of the Beneficial Owners of the en�ty
• KYC of the authorized signatory
This training material should be used only for internal trainings and should not be used in parts or as whole for solicitation.
