What is keyman insurance?

Keyman (key person) insurance is a life or critical illness plan a business takes out on an owner or an essential employee. If that person dies or is seriously ill, the business receives a payout to cover lost revenue, recruitment, or debts while it recovers.

Who needs keyman insurance in Jamaica?

Any business that would struggle financially if it suddenly lost a specific person, often the founder, a top salesperson, or someone with irreplaceable skills or relationships. It's especially important for small and family-run businesses.

Keyman Insurance: Protecting Your Jamaican Business

How keyman insurance protects a Jamaican business when it loses an owner or an essential person.

Most business owners insure the building, the vehicles, and the equipment. Far fewer insure the one thing the business can't run without: a key person. That's what keyman insurance (also called key person insurance) is for.

What keyman insurance actually is

It's a life insurance plan a business takes out on a person whose knowledge, skills, or relationships are essential to the company. The business owns the coverage, pays the premiums, and is the beneficiary. If that key person passes, the payout goes to the business, not the family, to keep things steady.

The "key person" is often the owner, but it can also be a lead salesperson, a technical expert, or a partner whose absence would seriously hurt revenue.

What the payout is meant to do

Losing a central person creates immediate, practical problems. Keyman coverage gives the business cash to handle them, such as:

Covering lost revenue while the company stabilizes.
Paying staff and ongoing bills during the disruption.
Funding the search, hiring, and training of a replacement.
Reassuring lenders, suppliers, and clients that the business will continue.
Buying time to plan an orderly transition or sale rather than a forced one.

Who should think about it

Owner-operated businesses where the owner is the business in customers' eyes.
Companies with a loan or line of credit, lenders often want to know the business survives a key loss.
Partnerships, where it can be paired with a buy-sell arrangement so a surviving partner can buy out the departed partner's share.
Businesses with one irreplaceable specialist carrying critical skills or relationships.

How to size it

Think about how much the business would need to absorb the loss: replacing the person's contribution to profit, plus the cost and time to recruit and rebuild. The figure should reflect the real economic hole, not a round guess.

The bottom line

If your business would struggle to survive losing one specific person, that risk is worth covering. Keyman insurance keeps a sudden loss from turning into a closed door.

If you're not sure who your key people are or what the exposure is, the Financial Checkup is a simple place to start the conversation.