What is the main objective of a key person insurance policy?

The main objective of a key person insurance policy is to protect the business from financial loss due to the death of a key employee. This type of insurance provides a financial safety net that helps the business manage the risks associated with losing a vital individual, whose expertise, relationships, or contributions significantly impact the company's operations and success.

When a key employee passes away, their absence can lead to a decline in revenue, loss of clients, and other critical challenges that could jeopardize the business's stability. Key person insurance allows the business to receive a death benefit that can be used for various purposes, such as covering the immediate financial impact of the loss, hiring a replacement, or investing in new strategies to maintain operations. By providing this financial support, the insurance helps ensure that the business can continue to function effectively despite the sudden loss of an important team member.