Key Person Insurance
A type of life insurance policy that a company purchases on the life of the company's key executive.
Investopedia Commentary
The company is the beneficiary of the plan and therefore pays the insurance policy premiums. Key-person insurance is needed if the sudden loss of a key executive would have a large negative effect on the company's operations. The payout provided from the death of the executive essentially buys the company time to find a new person or to implement other strategies to save the business.
Also known as Key Man Insurance, Key Woman Insurance, or Business Life Insurance.
See also: Beneficiary, Life Expectancy, Life Insurance