Key Person Life Insurance: 

Key Person Life Insurance is when the business owns a life insurance policy on the life of an employee who is vital to the operations and success of that business. It protects the business against the financial loss caused by the death of that person. 

Key Person Life insurance can be used when recruiting, hiring and training a replacement would be expensive to that company.  It can also be used when losing a top "sales representative or rainmaker" could result in loss of sales, contacts or a long term decrease in income if customers go elsewhere. Another use for key person insurance is when losing a key person would result in a loss of income to the company even though expenses remain the same for the company.

Life insurance can provide the proceeds in cash to help recruit, hire and train a replacement and replace lost income. It can provide a cash cushion to help employees, shareholders and creditors feel more comfortable in the business's long term prosperity and stability.