Key person insurance is a life insurance policy that a business takes out on its most valuable employee or employees. A policy can also include a rider for disability coverage to help if a key employee is disabled. Key person insurance helps safeguard a small business if an imperative employee dies or becomes disabled.

This kind of insurance covers debt in a business. Once a contingent liability policy is in place, if the life assured passes away, an amount is paid out to offset the loan and to relieve any pressure that there may be on the estate.