Key Person

This person could be an employee. This employee is so important, that the death of the employee would cause the business to suffer and impact the viability of the business. It can be that the "key person" is trained to do a specific task, where it is not possible to get a replacement trained to fill that position.

You can purchase a type of life insurance which protects the business. If the "key person" is disabled or dead, then there will be a resulting loss of income. This might mean that the business cannot complete a contract. Most often large contracts that come under bid bond, will require that the "key persons" have this type of insurance.

A "key person" could be you, for your the one-person operation. You support your family with a business, that you have developed over the years. If something happens to you, then the business stops. Likely your spouse is not trained to do what you do, and there may be physical limitations for the spouse performing the work. So you can have a key person life insurance, that is there to pay for someone to do what you do, to keep the business going. This person receives an initial salary, paid through this insurance.

Talk to your agent or broker, about who might be the key person(s) in your business.