It could be the Chairman, Managing Director, Sales Manager, Accountant or Personnel Manager.  Whoever he is, the reality is that in the event of his death or permanent disability, there will be a major setback to the business.

The loss of such a person is a definite threat to the profitability of an organization and such a risk can be undertaken by an insurance company instead of being a burden to the owners of the business.

A company would usually face one or more of the following problems if a key-executive should not be available:

*  The cost of replacing the key-executive including offering the new person the right remuneration.
            *  The cost of training the replacement.
            *  The cost in terms of delay during the time for the new person to assume full
                   responsibility of all his job-functions.
            *  The cost in inexperience and mistakes until the new person becomes competent and
                   skillful as his predecessor.

A key-executive may also be the Chairman or Managing Director and one whose personality is highly respected and regarded by bankers and others who do business with him.  In such cases, the loss of such a person will create further difficulties for the organization:

            *  Suppliers, creditors and bankers will tend to be hesitant and anxious as to the future
                   success of the company.
            *  There would possibility be a slow down in the business because of uncertainties within
                   the organization.
            *  There would possibility be an actual loss of company business - clients built from long
                   standing close relationships may go elsewhere.

Key-man life insurance is basically owned by the company on the life of the individual and the company itself is the beneficiary.  The insurance policy becomes a business asset and cash values (if any) are indicated on the balance sheet.

Life insurance through  a key-man policy will provide the business with funds to:

            *  Keep the business running.
            *  Assure creditors that their loans are safe.
            *  Assure suppliers that it is safe to continue supplying the organization.
            *  Assure customers/clients that the business will continue operation.
            *  Cover the mistakes of the new person until he learns the things his predecessor
                   knew from experience.
            *  Cover the expenses of finding, attracting, and training a new person to take the
                   deceased's place.
            *  Provide the "cushioning" effect so that long-range development programs of
                   the company are not affected.

With reference to the tax implications of premiums paid by the company the following general principles apply:

            *  If the premiums are treated as a business expense, the proceeds of the policy, 
                    upon death or maturity will be taxable.
            *  If the premiums are paid out of taxed profits, that is, disallowed as business
                    expenses then the proceeds will be tax free.

For more detailed information, one must seek advice from a tax consultant or a competent life insurance agent.

Recent surveys have clearly shown that the human factor in any organization is directly responsible for its success as a business.  It is the single-most dorminant and crucial factor in any organization.

Due recognition must be given to this aspect of the business and every organization must therefore take the necessary steps to minimize the loss of key persons as a result of death or permanent disability.

The simplest and most cost-efficient way is through the purchase of LIFE INSURANCE on these key persons.
And most important of all it needs an effective, efficient and experience financial planner to set up a qualified
plan with minimal premium payment for the organization. 

NOTE:    The premium for RM1,000,000 can be as low as RM7.48 per day for a key executive age 30.
                Please feel free to consult us.