The term that refers to benefits provided to replace revenue when a key employee is disabled is known as

• A. Key-person disability insurance.
• B. Business interruption.
• C. Contingent liability coverage.
• D. Emergency funds.

Answer: (A)

Protecting revenue when a critical employee can’t work shows why this term matters. A key-person disability insurance policy is owned by the business and covers a pivotal employee. If that person becomes disabled and can’t perform their role, the policy pays the business a benefit. Those funds are used to replace lost revenue, keep operations running, and cover costs to recruit or train a temporary or permanent replacement. This directly addresses the financial impact of losing a key contributor, which is why it’s the right term for replacing revenue in that scenario.

This differs from other options in meaningful ways. Business interruption insurance focuses on income losses caused by physical damage to property, not the absence of a person. Contingent liability coverage protects against certain third-party liabilities rather than income disruption from a key employee’s disability. Emergency funds are cash reserves the business holds internally, not insurance-triggered payouts.