What is often the primary objective of a key employee coverage?

Key employee coverage is primarily designed to address the financial impact that a business may suffer due to the loss of a key individual, typically someone whose skills, knowledge, or leadership is vital to the company's operations. When a key employee becomes unable to work due to illness, injury, or death, the business can face significant challenges, including a loss of productivity. This type of insurance helps mitigate that risk by providing funds to cover the costs associated with the absence of that key individual, such as hiring a temporary replacement, loss of business revenue, or the costs incurred in finding and training a suitable replacement.

The other options focus on broader aspects of employee management and benefits that do not directly relate to the specific purpose of key employee coverage. Providing health benefits to all employees is more aligned with general employee benefits practices rather than focusing on the effects of a key employee's absence. Competitive salaries are important for attracting talent but do not specifically address the risks associated with losing a key employee. Ensuring employee loyalty is an essential part of organizational culture but does not directly relate to the financial implications of losing a key leader or employee.