When an organisation has no key man insurance they run the risk of financial loss. What would happen if a key employee was unable to continue with their work for some reason such as accident or illness? There would most likely be a great deal of loss as clients like to deal with the same person when working on some deal or component of the business. Having another person suddenly take the place of the person they were dealing with actually brings about distrust that the business is unstable in some way.
Not only that, but the key person knows all the little ins and outs of the business deal and these things may not even be written down in black and white. This makes it very difficult for a replacement person to come in and take over effectively and in a way that is acceptable to the client. This can result in the client withdrawing his deal or offer, or whatever the two were working on together. And so the organisation not only suffers the loss of the business, but loss of reputation as well.
But when they have key person insurance this can effectively save them, at least from financial loss. It gives them the time and finances to wait out the interim until their key person can return, or alternatively they can bring on board someone else who is eminently suited to take the reins. It takes time to find and train such a person of course, and time is usually money in the corporate world.
With key person insurance in place the organisation pays the premiums and they are the owner of the insurance policy, so they get paid. Thus they do not have to worry about their budget to find and train a replacement, because they have the insurance payment to depend on.