A key person insurance policy can pay for which of the following?

A key person insurance policy is designed to protect a business from the financial impact that arises when a key employee, often critical to the company's operations and success, becomes unable to perform their role due to death or disability. The funds received from such a policy can be used for several purposes, primarily focused on mitigating the economic loss faced by the business.

Training a replacement is a significant expense for any business when a key employee is lost. The funds from a key person insurance policy can be allocated to cover the costs associated with recruiting, hiring, and training a new employee to fill the gap left by the key person. This makes it crucial for maintaining the continuity and stability of the organization during a challenging transition.

In contrast, the other options mentioned do not accurately reflect the purpose of key person insurance. For example, workers compensation pertains to liabilities associated with workplace injuries and is separate from coverage for loss due to the absence of key personnel. Hospital bills for the key employee, while important, are typically covered under health insurance rather than key person insurance, which primarily focuses on the business aspect rather than individual medical expenses. Lastly, the loss of personal income, although a concern for the individual, does not directly relate to the function of a key person policy, which is