This insurance provides coverage for an employer if a key person dies. This benefit will provide the employer with enough cash to hire a replacement and weather the storm until the key person can be replaced if possible.
The benefit/insurance is not tax deductible but is paid tax free to the employer/beneficiary. Since it is not a deductible expense, the benefit can be discriminating; who you choose to cover is your choice. The key person is the insured and therefore must be able to pass the insurance company requirements for coverage. The cost is determined by the age, health and insurability of the key executive.
Policies can be designed to provide a benefit to the employer or employee if the key person does not die while employed. The employer owns the policy and has all rights associated with ownership.