Key person life insurance does NOT reimburse a company for which of the following?

Key person life insurance is designed to protect a business from the financial impact of losing a vital employee—often referred to as a key person—due to death. This type of insurance can help cover various costs associated with the loss of the key individual, such as hiring a replacement, retraining employees, and making up for lost profits that may result from their absence.

In this context, the option stating that the insurance does not reimburse a company for increased pension liability stemming from a key person's death is accurate. Pension liabilities are generally contractual obligations that are not directly impacted by the death of an employee. The insurance provides financial support related to the operational aspects and disruptions caused by the death, but it does not cover liabilities associated with pension plans, since those obligations remain with the company regardless of the key person's status.

Understanding that key person life insurance focuses on mitigating operational and revenue-related losses rather than fulfilling pension obligations clarifies why this particular response is the correct choice.