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Life Insurance for Critical Human Resources

Published on: 27 July 2022 by Michael Lamb

There are normally two critical variables when it comes to any business purchasing life insurance:

  1. The ability of a company to continue operations after the death of a key employee
  2. Overall employee satisfaction with the company’s benefits offering

A business which is unconcerned with either of these two issues is likely not going to have any life insurance, in any form, covering the life of any employee. However, this can cause the company to lose out its competitive advantage in certain situations (like hiring the best possible talent), or even be exposed to a major financial loss should a critical employee unexpectedly die.

While life insurance is generally thought of as an individual insurance product, normally purchased and administered on a private basis, there are a number of flexible and highly useful business life insurance products offered in Hong Kong and across Asia which can prove invaluable as and when they are needed.

Group Life Insurance Protection

Any business considering the question of life insurance should start with their employee benefit offering and whether it includes insurance coverage for a member of staff dying unexpectedly.

In a 2019 study, 59 percent of workers stated that they would like to receive some form of life insurance protection through their employer. Further to this, a second study conducted in 2021 found that up to 36 percent of workers had a plan to purchase life insurance in the next 12 months with the principal reason for having previously avoided such a purchase being cost.

Businesses offering group life insurance coverage to workers are able to give employees higher levels of job security, as well as provide a sense of safety against the unknown. According to a 2020 report by leading Life Insurance Company, MetLife, providing a group life insurance policy to employees allows the company to better support workers – and workers who feel supported by their employer have higher levels of engagement, productivity, and success in their jobs.

This is a critically important consideration, especially in the wake of the Covid-19 Pandemic and its continuing impact around the world. The same MetLife study found that 74 percent of workers have some long-term health concern regarding an aspect of the virus.

In the modern world, offering life insurance protection to employees is a simple (and often cost effective) way to engender positive and productive sentiment amongst a workforce. This is especially true if a company is attempting to attract and retain the best possible employee talent. Adding a group life insurance policy to an employee benefits offering is a valuable tool in differentiating a company and its competitors – and can even ensure employees are not tempted to jump ship by a higher wage packet or fancier title if they will lose their life protection.

Group Life Insurance Benefits

Group life insurance is generally taken out as an annually renewable term policy, and any claims are paid to the beneficiaries nominated by the employee being covered. While the policy owner is the company taking out the coverage, the benefits of the plan are being provided (in most cases) to a deceased employee’s family and loved ones.

The “Term” under most group life insurance products will be the term of employment at the company holding the policy – the coverage will remain in place until the specific term of the coverage has been reached, or the employee leaves the organization.

Group Life Insurance is often priced much lower than a comparable policy obtained on a private basis, and in some cases can even be continued as an individual once the worker leaves a company. However, the premiums associated with continuing coverage will generally be inflated in this case and many workers opt to simply let their life insurance protection lapse after leaving their employer-provided plan.

Outside of simple death cover, many group life insurance plans in Hong Kong can be tailored to the needs of your organization and can include Personal Accident Protection, Critical Illness cover, and even disability income protection insurance.

Key Person Life Insurance Coverage

For many companies ensuring that the organization is insulated from employee deaths will be more important than providing life cover as part of a benefits package.

With small businesses and startup companies, a nightmare scenario is one of the key employees dying unexpectedly. From a founder, to the CEO, or even the marketing director, the death of an important and irreplaceable staff member at any company can cripple day-to-day operations.

Unlike Group Life Insurance a Key Person Life Insurance policy pay a business in the event of the unexpected death of a critical and key member of staff. This means that should a vital human resource for a company die then the business will receive a financial benefit. This benefit can be used to fund a pause in operations while assessing the best way to continue, it could be used to hire new staff in an attempt to overcome the loss, or it could be used to pay shareholders and shut down.

The biggest benefit offered by a Key Person Life Insurance policy is flexibility, and the ability to make decisions on within the company in the wake of a traumatic and emotional loss.

Key Person Life Insurance is a type of coverage which no company ever wants to use, and because of this it often gets overlooked when compiling a comprehensive risk management toolset. The unfortunate truth is that Key Person Life insurance is a morbid and dark subject that many decision makers would rather ignore than manage. However, this can leave a company dreadfully exposed – especially if that same decision maker is the individual who has died.

Key Person Life insurance is effective disaster planning for a company – the existence of a policy provides options for a business rather than having a single course of action being decided for the organization. In a best-case scenario, a Key Person Life insurance policy exists and is never used. But in a worst-case situation, with the possible death of an individual who holds the veritable “keys to the kingdom” in any given company, having some compensation against that eventuality can prove invaluable.

Life Insurance for Companies in Hong Kong

CCW Global is able to provide comprehensive Life Insurance services to companies in Hong Kong and across Asia.

From market analysis, benchmarking your existing coverages, to comparing solutions which are best placed to meet the risks a business will face, our expert brokers work with leading international underwriters to find the risk management solutions which best work for your key stakeholders.  

Contact CCW Global today to request a no-risk, no-cost, no-obligation consultation for your Hong Kong Business Insurance needs today.



Author: Michael Lamb

Michael Lamb is an insurance industry professional with many years of experience within the Hong Kong Insurance market. Focusing on APAC coverage issues, Michael is able to provide extensive analysis and insight to a range of pressing topics. Previously, Michael provided insurance broker Globalsurance.com with their most highly valued articles and was a key influence in the development of all the content on Pacificprime.com, Michael has a passion for insurance matched by few others in the region.

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