KEYMAN
Save the Business. Protect the Family.
This executive reference summarizes key methodologies, calculators, and communication strategies taught in LUAP LEAP Module 5. Keyman planning bridges the absolute disconnect between protecting physical assets and insuring the human enterprise that creates the actual value.
Core Philosophy
Which Asset Creates the Real Value?
Most businesses readily insure modern factory equipment valued at ₱50 Million (and pay high premiums without hesitation), yet they leave their Key Person—the actual engine of customer relationships, vision, and operational success—completely uninsured.
"The Empty Chair tomorrow creates a catastrophic business and family crisis simultaneously."
The Impact of One Loss: Four Affected Worlds
Business Operations
- Immediate revenue disruption & lost profit
- Operational gridlock & delayed execution
- Loss of critical technical or domain expertise
The Owner's Family
- Sudden income halt & salary discontinuity
- Estate and inheritance taxes triggered instantly
- Potential forced liquidation of family assets
Employees & Staff
- Critical loss of morale & general security
- Key talent attrition to eager competitors
- Uncertainty about business future viability
Clients & Creditors
- Dramatically reduced customer confidence
- Immediate calls on corporate loan guarantees
- Risk of credit facility lines being frozen
Determining Key Person Status by Dependency, Not Title
Use these tests on any executive or team member to assess corporate exposure. Check all that apply to run a live assessment.
1. Revenue Test
Does this person generate substantial directly-attributable corporate income?
2. Relationship Test
Would major clients immediately migrate if this person left the company?
3. Expertise Test
Is this specific technical or strategic knowledge nearly impossible to quickly source?
4. Leadership Test
Does this person drive the central strategic and capital allocation decisions?
5. Dependency Test
Would core operational capacity immediately fall below 50% without them?
Corporate Risk Appraisal
Toggle criteria above to gauge the relative depth of Keyman dependency risk.
The Keyman Risk Calculator
Calculate real enterprise exposure based on Slide 9 methodologies instead of arbitrary multiples.
Business Profile Inputs
Quantified Exposure Metrics
Range automatically calculated utilizing the Lost Profit exposure ceiling down to the Replacement Cost floor to establish a scientifically defensive corporate planning portfolio.
Advisory Transition Insight
"Corporate clients do not buy policies to save taxes—they allocate reserves to guarantee ongoing liquidity. Present this range dynamically so corporate directors see premium as capital reallocation rather than an operating expense."
Four Business Risks Solved by Keyman Liquidity
1. Revenue Protection Risk
Insures the immediate revenue shortfall that occurs when key client interactions and projects stall after executive loss.
2. Debt & Credit Stability Risk
Provides guaranteed liquid capital so business loan guarantees aren't called on personal assets and credit ratings remain secure.
3. Ownership Stability Risk
Funds Buy-Sell arrangements. Prevents family from inheriting operational burdens they cannot handle, and preserves business integrity.
4. Talent Retention (Golden Handcuffs)
Utilizes premium cash value accumulation to incentivize key executives with non-qualified deferred compensation perks to ward off competitor poaching.
Module Competency Check
Which underlying corporate structures should trigger a direct Debt Risk Keyman discussion?
Advisory Playbook
The 10-Minute Discovery Agenda
Objective:
Create safety, establish credentials, and build an understanding of the business operations without mentioning specific insurance products.
Verbatim Advisor Script:
"Thank you for sharing your calendar with me today. Most business owners invite me over when they want to talk about specific tax products or buy policies. I actually prefer starting somewhere different: tell me about the story of your business. How did you get started, and what are the core drivers of your operations?"
Complete Print Agenda & Discovery Script
"Thank you for sharing your calendar. Tell me about the story of your business. How did you get started, and what are the core drivers of your operations?"
"If we looked at your entire company directory today, who is the one single person whose empty chair tomorrow would cause you to stay up at night worrying about financial damage?"
"If that specific key person was no longer available tomorrow, what actually happens to current client contracts, outstanding credit lines, and bank guarantees?"
"How much real financial loss does the corporation sustain while we search, recruit, train, and ramp up their replacement?"
"Would it be valuable to review corporate funding structures designed to secure that specific exposure using off-balance-sheet reserves?"
Premiums Deductibility
Under standard revenue regulations, corporate Keyman premiums are Generally Not Deductible for corporate income tax purposes if the company is directly or indirectly the designated beneficiary.
Death Benefit Status
Keyman insurance proceeds received by the corporate employer upon the death of the insured are Generally Received Tax-Free, allowing instant, non-taxable liquidity to hit the balance sheet.
Cash Value Allocation
Premium policy cash values build on the balance sheet as an asset. Withdrawals, policy loans, or plan assignments require Proper Structuring to ensure minimal tax implications.
Keyman and business continuity planning is a continuous strategic conversation. Keep this reference as a guide for your next corporate meeting.