ACE Personal Trainer Practice Exam

Which insurance compensates a business for the loss of a key individual?

1. General liability insurance

2. Product liability insurance

3. Keyman insurance

4. Health insurance

The correct answer is: Keyman insurance

Keyman insurance is specifically designed to protect a business against the financial impact of losing a key individual who plays a crucial role in the company's operations. This insurance provides compensation to the business in the event that the key person becomes unable to work due to death, illness, or disability. The funds can be utilized to cover lost revenue, recruit and train a replacement, and manage any disruptions caused by the loss. This type of insurance is particularly important for small businesses or startups that depend heavily on the skills and leadership of a few vital employees. By securing keyman insurance, businesses can ensure continuity and stability during challenging times, thereby safeguarding their investments and future growth. In contrast, general liability insurance covers a business against claims of bodily injury or property damage, product liability insurance addresses claims related to defects in products sold, and health insurance provides medical coverage for employees but does not directly compensate a business for the loss of key personnel.