Which insurance is meant to protect a business from the loss of income due to the death of a key employee?

Key Person Insurance is specifically designed to safeguard a business from financial losses that can occur when a key employee—someone whose skills, knowledge, or leadership are vital to the success of the organization—dies or becomes incapacitated. This type of insurance provides the business with a financial payout that can be used to cover lost income, finance hiring a replacement, or manage other expenses resulting from that employee's absence.

While life insurance generally provides a death benefit to beneficiaries, it is not tailored specifically for the unique needs of a business regarding an employee's significance to its operations. Disability insurance focuses on protecting against the inability to work due to health issues, rather than the death of employees. Health insurance provides coverage for medical expenses but does not directly address the financial implications of losing a key employee.