We know employees are a company’s top resource. There may be some within the group of employees whose presence is of relatively higher value to a company. It may have something to do with a unique skill set, knowledge of a product, leadership capabilities, legal requirements (e.g. there might be only one person in a group who holds a certification necessary for grant of business license), or any combination of factors.

Hence, in the absence of such key people a company may stand to lose out on market share, profits, competitive advantage, or even cease to exist. Insurance market has come up with a product that compensates a company to some extent (may not be equivalent to exact amount of loss incurred) in case this type of situation arises. It is very much a type of life insurance, only on a certain key person. However, the beneficiary is usually the company itself.