A ‘keyman’ is an important person in the company which constitutes one or a few of the following criteria:
- Brings the bulk of the sales
- Directs and manages corporate growth strategy
- Posses specialized skills
- Ambassador of the company
- Responsible for product development
- Part of the financial management team
It started as a simple dream to set up a small restaurant; Mr. Yap now owns his own chain of restaurants. His head chef is well renowned in the industry and has numerous awards under his belt. The head chef takes charge of designing the menus and is seen as the main advertising icon for the business. Little did the public know that Mr. Yap was in fact the owner behind the restaurant and did not have much culinary experience. Mr Yap then starts to worry about the future of his business, should anything happen to his head chef. Recently, the head chef had fallen ill and there was a significant fall in revenues. Should anything else happen to his head chef, he will need time to source out a suitable and eligible replacement. His business may be affected tremendously.
As a result of this dilemma, he decides to purchase a $ 1 million premium Universal Life plan for his head chef which had a coverage of $ 4 million. He will then distribute 10% of the proceeds to his head chef’s family in the event that he passes away. The remainder will be used as a buffer to continue running the restaurant chain while finding a suitable replacement for his head chef.