If you were searching the internet for keyman insurance Singapore then you have come to the right place as here we will tell you all about the keyman insurance and will also tell you the meaning, definition as well as the way in which you can take the policy and also different type of expenses it covers like critical illness insurance etc. There are many reasons why a company takes a keyman policy for its employees so that they work more efficiently as they are getting a huge bonus at the end of the period of the policy.
What is keyman insurance in Singapore means will be your question, then this is the answer. Many companies in Singapore take this type of loan so that their employees are boosted to work harder in the company so that they too can make a huge amount of money and get more increment in their salary after working hard and doing something useful and creative for the company. The main reason for all the business to take this insurance policy so to keep the employees retained in the company for a longer period of time, as usual, all the employees quit the company in something around a time period of 3 to 5 years.
Another reason for which the policy is taken is that the company wants to cope up with all the losses that will occur when the employee will leave the company, or the company will have to face heavy loss if the death of the insured person had died due to any reason so the money will first go to the company and then after deducting some amount the remaining amount will be directly transferred to the bank account of the insured person family.
Is keyman tax-deductible in the policy?
Tax deduction for premium paid is given only on the condition that the policy is taken so that the company can cope up with the loses that have occurred due to the loss of the life of their keyman then there are also a few conditions that should be met with if you want a tax deduction in premium paid.
Proof should be shown regarding that the person who is insured by the company is the keyman of the company due to which the company is making a huge profit. Another proof is to be given by the company to show that how much amount of money of profit has been accumulated due to the efforts of the keyman and it should be about 20% of the total annual profit of the last three years of the company.
It is important that the company which has taken the policy for the insured person to show them the proof of the special skill in the employee due to which the company has made a huge amount of profit. Hence without showing the efforts of the employee, the company cannot take an insurance policy under the name of the insured person. The abilities will not include the normal things like his or her academic performance in all their exams or the amount of professional qualification that they hold, but it will be judged on the basis of how the connections of the insured person have led to the rise in the company’s overall profit and also the efforts that the employee has made so that their company becomes huge and great.
IRAS declared deduction on premium
The IRAS has provided the guidelines which tell us all about the deductions that can be made in the premium of the keyman insurance policy as they are making the payment of premium so that they ensure the life of the keyman of their company.
When the company is the beneficiary of the loan so that they want to take the amount of the policy so that they can use the money to pay for any losses or the expenses occurred then, in this case, it is difficult to make any reduction in the payment of premium by the company as they are going to receive the amount of policy for themselves.
The allowance on deduction in premium can be given on a condition that the money of the policy will be given whole or after some amount has been removed by the company and then the rest transferred to the bank account of the insured person’s family bank account.
What is the difference between a keyman insurance policy and life insurance?
The main difference between both the policy is that where the money of the policy will go when the time period of the policy ends, or the amount has to wit5hdrawn by the insured person due to any emergency occurred but the money in life insurance goes directly into the bank account of the insured person, but in the keyman insurance policy the money is transferred to the company’s bank account.
The proceeds of the keyman insurance can be used by the company in many ways, but the most common way is that they use it pay off any remaining debt or to use the funds to boost up and research that they are doing for their own company’s product.
In a personal loan, the amount of money of the policy is transferred straight to the bank account of the insured person’s account, but in context of Singapore, the money will be transferred when the probate process is finished properly.
The premium which is paid by the company in a huge amount can be asked to the tax authority for reduction only if the conditions which are mentioned above are fully satisfied by the company or the company is liable to a reduction in premium and has been declared by the tax authority themselves due to the company either being very big, or they want the amount of money so that they can clear off their old and remaining debts.
I hope you get some valuable information from this article.
