Final answer:
Key person insurance helps businesses protect themselves from potential financial losses and disruptions caused by the death or disability of a key employee or owner.
Step-by-step explanation:
The purpose of key person insurance is to provide financial protection to a company in the event of the death or disability of a key employee or owner. This type of insurance helps the company cover the costs of finding, hiring, and training a replacement, as well as protecting against financial losses and ensuring business continuity.
For example, if a company heavily relies on the expertise or leadership of a key employee, such as a CEO or a high-performing salesperson, their absence could have a significant impact on the company's operations and revenue. Key person insurance provides a financial safety net to mitigate these risks.
In summary, key person insurance helps businesses protect themselves from potential financial losses and disruptions caused by the death or disability of a key employee or owner.