What is key person life insurance?

Key person insurance is a life insurance policy owned by a business on a critical employee or owner. If that person dies, the death benefit is paid to the company — not the individual's family.

The benefit can be used to offset lost revenue during the transition, cover recruitment and training costs for a replacement, or simply keep the business financially stable during a difficult period.

It's one of the most important — and most overlooked — forms of business protection. If your company would struggle significantly without a specific person, that person probably needs key person coverage.