Assurance Homme Clé / Key man insurance 🇺🇸

Souscrit par
Entreprise
Bénéfices
Capital décès versé à l’entreprise ou versement d’indemnités journalières en cas d’ITT.
Couvre...
Homme clé désigné
Coût annuel moyen
Exemple : Garantie : 1 000 000€ Profil : 35 ans non fumeur. Coût annuel moyen : 962€ HT
Risques couverts
Décès, PTIA, IPT, ITT
Justificatifs demandés
→ Montant de garantie souhaité → Date de naissance et sexe → Fumeur ou non → Etat de santé → Pratique de sports à risques
Principaux acteurs
Metlife et Generali
En savoir plus
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🇺🇸 english content but also relevant for french companies.

What is a “key man insurance”?

It’s an insurance annually subscribed by the company to maintain its business activity in case of death, total and irreversible loss of autonomy, disability or incapacity of a key person (founder, C-level, manager …) defined as "key". The insurance guarantees the payment to the company of a specific capital sum or a daily allowance to compensate for the financial loss suffered by the company, which it can dispose of freely.

SHA Article example:

The Founders and the Company shall use their best efforts to procure that, as soon as practicable after the date of execution hereof and in any case no later than three (3) months after the Completion Date, the Company shall subscribe and/or maintain at all times while this Agreement is in effect: (a) an insurance policy covering the potential civil liability of all Members and officers of the Company, and (b) "key man" insurance policies with proceeds payable to the Company in relation to the Active Founders, to a level and on terms reasonably satisfactory to the Investors Members and approved by the Board, it being stated that the foregoing shall be placed on the agenda of the first Board meeting following the Completion Date.”

What risk does it cover?

  • Death: The death capital can be limited to €15M with a minimum of €15K. It is generally based on the value of the "key man", itself defined by his contribution to the company's results.
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Usually, investors ask for 1 000 000€ of death benefit.
  • Total and irreversible loss of autonomy (Perte totale et irréversible d’autonomie (PTIA)) or permanent disability (invalidité permanente (IPT))
  • Temporary incapacity to work of the "key" person (Incapacité temporaire de travail (ITT))

Why?
  • Avoid financial losses (in cases of significant impact on the company's ops and brand/sales) ;
  • Cover extra costs (seasoned hires, organizational or communication costs) ;
  • Reimburse bank loans ;

Why & What kind of Assurance Homme Clé VCs ask for?

As seed investors, co-founders are key to company growth trajectory. It’s market practice for investors to ask for “D&O” and “key man insurance” subscription before the deal closing. It is mentioned in the LOI. If not, it should be also mentioned in the Shareholder Agreement.

Each year, your investor should ask for “D&O” and key man insurance certificate, proving founders are backed (as mentioned in SHA articles). If company doesn’t subscribe these insurances, investors could not continue to invest.

Average price?

Monthly subscription fees vary depending on the age and health of the key person, ranging from 60 to 400€ per month. As the person ages, the price increases.

Examples within our portfolio

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In most of “key man” insurances, extreme sports are forbidden. If you do extreme sports on a regular basis, you will pay a higher fee. If you take part in extreme sports occasionally, you will need to inform your insurance company and pay an additional cost.

Insurance / Wealth management contacts

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CRF assurances

👤 Sylvie Menashe Directrice générale

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Carat Capital

👤 Cédric Genet Associé Fondateur

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Nexus

👤 Richard DEGIOANNI Gérant Associé

Well known but no contact:

Top providers sourced through portfolio

  • Assurup
  • BNP
  • Gan Assurances
  • Generali
  • Maaf
  • Metlife
Ugip

CHAMBIRON

Christophe

Chargé d’affaires

Tel : 01 44 53 49 99

Adresse : 73-75 rue Brillat Savarin, 75013 Paris

Q&A

Who can be qualified has a “key person”?

The administration considers a "key person" any person who plays a decisive role in the operation of the company. Example : CEO, head of sales, CTO, critical engineer… A regular employee can be considered as “key person”.

Does “key man insurance” mandatory?

Insurance is not mandatory but is contractually required in the context of fund investments and loans.

How “key man insurance” is taxed?

Subscription fees are deductible from operating expenses for the year in which they fall due.

Can “Key man” insurance be subscribed by a holding?

Yes.

Additional resources

CRF Assurances - Assurance Homme-Clé.pdf213.1KB