Which form of insurance is designed primarily for business owners to cover potential loss due to the death of a critical employee?

Key Person Insurance is specifically designed to protect a business from financial loss that may occur due to the death or incapacitation of a vital employee, often referred to as a "key person." This type of insurance enables the business to cover expenses associated with hiring and training a replacement, offset lost revenue, and maintain financial stability during a challenging transition period.

The policy is owned by the business, which pays the premiums and is the beneficiary. In the event of the key person's death, the business receives the death benefit to help mitigate the financial impact. This relevance to protecting the business structure underscores why Key Person Insurance is an essential tool for business owners, especially in small businesses or those heavily reliant on specific personnel.

Other types of insurance, such as term insurance, whole life insurance, and universal life insurance, primarily focus on individual coverage for personal needs, such as family protection, but do not specifically cater to the needs of businesses in the same way.