Key Man Agreement

KEY MAN AGREEMENT

Summary A Key Man Agreement can be used by a company that takes out Key Man insurance over the life of someone who plays a critical role in the business. A Key Man Agreement is an acknowledgement by the key man or woman that the insurance policy is in place, and a confirmation about each party’s rights and obligations around the life policy.

Why do I need a Key-Man Agreement? Often a company employs someone who turns out to be a critical part of the organisation’s business. If something happened to that person, the business could seriously suffer. This prompts the company to take out keyman life insurance cover over the critical resource. A written agreement can be a useful document for the company to sign with their key resource. It sets out the critical resource’s rights and responsibilities with regards to the insurance policy, including what might happen to the policy if the resource leaves the company.

What does the document say? The Key Man Insurance Agreement consists of: Definitions; Introduction; Policies; Cession of Policies; Disputes; General.

What does this agreement look like? The standard document can be printed onto five pages.

What do you need to do to use the agreement?

• Read the sample Keyman document to ensure that it suits your requirements. Make any changes as required.
• Complete Annexure A by adding in the details of the life policies taken out.
• Ensure both policyholder and key man resource sign the Agreement with each getting a copy of the final, signed agreement.

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