Most small businesses do not need Keyman Insurance. It is usually purchased only at the insistence of investors who fear the loss of the key manager. It is not meant to be a replacement or supplement for regular life insurance purchased by an individual for the benefit of his or her family.
If you are considering purchasing Keyman Insurance, consult an insurance advisor who is familiar with these policies. It is also important to consult your tax advisor to make sure that deductions premium payouts if any, can be maximized and that there is the minimum tax possible upon the payment of any Keyman Insurance benefits.
The corporation may also want to separately consider the need to buy life insurance for the purpose of buying back the shares of stock from the estate of a deceased Key Executive. Implementing a plan involving life insurance in this case usually involves completing an agreement between certain key shareholders and the corporation. Again, consult with a tax lawyer and insurance consultant before proceeding with any such plan.
Example: By paying around RM1000 a month, a Company can Insure their Top Sales people Age 30 for RM500,000.