Business Life and Health Insurance
Definition - What does Business Life and Health Insurance mean?
Business life and health insurance is a type of insurance that covers companies from potential losses in the event of the death or incapacitation of a key member of the company, such as the chief executive officer. As the sudden loss of a key member could severely affect business operations and lead to substantial losses, this type of insurance offers financial protection against that risk.
Business life and health insurance is synonymous with key person insurance, key man insurance, and key employee insurance.
Insuranceopedia explains Business Life and Health Insurance
Although large businesses can employ hundreds, thousands, or even tens of thousands of employees and more, the loss of a key member whose skills, experience, or professional networks provide great value to the company would result in significant financial losses. Therefore, key person insurance functions as a form of business protection and has many advantages, including providing peace of mind to creditors and shareholders who may worry about the solvency of the company.
To illustrate this concept, imagine a professional football team losing its star quarterback. This could have a huge effect on its future success. The same is true for many businesses who decide to insure themselves against this type of loss.