The key man insurance protects the interests of the company in case of death of its leader or an important contributor. It is also useful to compensate for any shortfall in cash or to finance the establishment of an interim management.

Imagine a football team without their star striker.A disability that might be insurmountable.One or more persons may be necessary for the successful continuation of the activity: this is called a key man. In an SME, the key man is usually the leader himself. But a director, a commercial or a technician to unique know-how may be considered essential from the point where their prolonged absence causes a significant loss of activity. It is an employee who makes the value of the company and underlying the revenue, “the firm defines Matthew Joly Chorus Audit Council, specializing in insurance audit.protect sme

The key man may be a specific insurance policy that covers financial death – whether accidental, due to illness or even suicide – if it occurs more than two years after the signing the contract.His total and irreversible loss of autonomy (TILA) is also included in the main guarantee.Compensation is paid to the company that this insurance. It is the sole beneficiary.The payment of this capital will allow it to take the time to reorganize, to continue its development to pay its expenses and to finance the possible decrease in productivity. The ceiling of the premium is set at 15 million euros.Of course, over this amount, the more expensive insurance .But the benefits depend on the estimate set by the leader and his insurance broker at the time of signing the contract.

An expensive product and some tax benefits The companies subject to corporation tax or taxed in the category of industrial and commercial profits (BIC) can deduct their contract key man, because they are an operating expense for the company. They are deductible from taxable income. Note however that compensation for the death of the leader is considered a taxable benefit and thus reintegrated into the result.

In addition, the company has no right to claim the premium if the insured risk does not occur, or when the contract has expired.To unlock the capital, you must send the documents requested, such as the death certificate, the insurance company.If there is no dispute, the delays are short enough to ensure the survival of the company: the order of 15 days after receipt of parts.