Key Person Insurance
A life insurance policy that a company takes out on a key employee whose death would cause significant financial loss to the business.
Detailed Explanation
The company is usually the beneficiary and uses the death benefit to help cover costs associated with replacing the key employee or to mitigate financial losses.
Practical Example
ABC Company purchased a key person life insurance policy on their CEO. If the CEO were to pass away, the company would receive the death benefit to help them navigate the transition and find a suitable replacement.
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