Key person coverage is placed by a business to compensate that business for financial losses that would arise from the death or extended incapacity of the member of the business specified on the policy, usually an owner, officer or co-founder. The policy’s term does not extend beyond the period of the key person’s usefulness to the business. The aim is to compensate the business for losses and facilitate business continuity. Key person insurance does not indemnify the actual losses incurred but compensates with a fixed monetary sum as specified on the insurance policy.