Key Person Insurance
Key person insurance is an important form of insurance for a business.
Key person insurance policies are usually owned by a business and insure a key employee who is responsible for the majority of profits, or has a unique and hard to replace skill set that is vital to the organization. An employer may take out a key person insurance policy on the life or health of any employee whose knowledge, work, or overall contribution is considered uniquely valuable to the company. The employer does this to offset the costs (such as hiring temporary help or recruiting a successor) and losses (such as a decreased ability to transact business until successors are trained) which the employer is likely to suffer in the event of the loss of a key employee.
Key Person insurance is not a product, but rather a concept that is used by corporations when purchasing any of these types of insurance products for key employees.