Quick Definition

Key person insurance is a type of life insurance policy taken out by a business to compensate for financial losses that may arise from the death or extended incapacity of an important member of the business.

Examples

• 1A tech startup purchasing key person insurance on its lead software developer to protect against the financial impact of potentially losing this individual.
• 2A marketing firm taking out a policy on its CEO, whose vision and leadership are critical to the company's success and growth.
• 3A small business that relies heavily on one sales director who generates a significant portion of the company's revenue securing key person insurance to mitigate risks associated with their potential absence.

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