This Insurance cover is a yearly renewable life assurance policy taken out by an organisation on the life (or lives) of key employees in the organisation. A lump sum benefit known as the sum assured is payable on death of the key person for the benefit of the organisation.
The policy may also be required to cover the financial interest of a third party through “assignment” of the policy to the third party. The sum assured is usually equivalent to the loan amount granted to the individual or the organization.
The individual to be covered, will be required to undergo full medical examinations.
The premium for providing this cover for each individual will depend on the age, sum assured and the outcome of the medical examination.
The Orgnisation’s Benefits;
- In the event that the keyperson dies, there will be continuity in the organisation because resources will be readily available to hire another keyperson or consultant.
- In cases where the director of a company obtains a loan on behalf of the company and later dies, the company’s property will not be repossessed by the bank because the Insurance Company will pay the outstanding balance.