Keyman insurance, also known as key person insurance, is an insurance policy taken out by a business on the life of an important employee, usually a manager or executive. The policy pays out a lump sum if the key person dies or is diagnosed with a critical illness. The policy is designed to protect a business from the financial loss that can result from the death or illness of a key employee, and can be used to cover the cost of recruiting a replacement or the cost of lost profits.