Keyman Insurance and Group Health: Two Policies Every Business Owner Needs

After working with dozens of business owners in Gorakhpur, Padrauna, and Deoria over 31 years, I have noticed a consistent gap: they insure their factories thoroughly, but rarely insure their most valuable assets — their key people.

What is Keyman Insurance? A keyman policy is taken by a company on the life of a key employee or partner — typically the founder, managing director, or top salesperson. The company pays the premium and is the beneficiary. If the key person dies, the company receives the death benefit to: repay business loans the key person was personally guaranteeing, fund the search for a replacement, continue operations during transition, and compensate for lost revenue.

Tax benefits: Premiums are deductible as business expense under Section 37(1) of the Income Tax Act — making coverage effectively 30% cheaper for companies in the highest tax bracket.

What is Group Health Insurance? A single policy covering all employees for medical expenses. Minimum group size: typically 7 employees. Premium is fully tax-deductible as business expense.

Why every Gorakhpur MSME should have it: Employee retention in manufacturing and services is a real challenge. A Rs 3 to 5 lakh family floater for each employee costs approximately Rs 2,500 to 4,000 per employee per year — far less than the cost of replacing a skilled worker.

My typical recommendation for a Gorakhpur MSME with 10 to 50 employees: Keyman policy of Rs 1 to 2 crore on the founder to protect against bank loan guarantee risk, plus a group health plan covering all permanent employees and their families.

Call me at 9415313434 to get a customised quote for your business.

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