What is key-person insurance and how is it connected to business valuation?

Key-person insurance is a life or disability policy owned by the business on a key employee or owner whose loss would significantly damage the company’s revenue or operations. Only 22% of business owners currently have key-person coverage in place. The valuation process identifies which individuals are most critical to business value — and quantifies what their loss would cost — so coverage can be sized appropriately rather than estimated.