What the source describes
RBC Insurance describes key-person insurance as coverage owned by a business on a person whose death or disability could cause a material financial disruption to the organization. The source discusses both life and disability coverage and identifies potential uses of proceeds such as offsetting lost revenue, replacement costs or other business obligations.
Why it belongs in Binder HR
The topic sits at the boundary between people risk and business continuity. A key employee or working owner can be central to client relationships, technical knowledge, revenue generation or day-to-day operations. Disability can create the same operational dependency problem as death even though the underlying insurance products are different.
Partnership context
For owner-managed businesses, disability coverage can also intersect with partnership and shareholder planning. The insurance product does not create a buy-sell arrangement or decide what happens to an ownership interest; those questions depend on the organization’s agreements and circumstances.
Source boundary
This briefing is based on a Canadian insurer’s public description of its products. It is included as an attributed industry source, not as government guidance and not as a recommendation to purchase insurance.