Which of the following is NOT a reason for a business to buy key person life insurance?

The correct answer indicates that covering the increased pension liability if a key employee dies is not a primary reason for a business to buy key person life insurance. Key person life insurance is primarily intended to protect the business from the financial impact of losing critical personnel. When a key employee passes away, it can lead to significant financial loss, disruption of operations, and challenges in maintaining continuity.

While the death of a key employee may indeed affect pension liabilities, this aspect is generally not the focus of key person insurance. Instead, the policy is designed to provide immediate funds to help the business stay afloat, cover expenses, and assist in the transition during the challenging period following the loss of a key individual. It helps ensure that the business can continue operations without immediate financial strain.

Other answers highlight valid reasons for acquiring key person insurance, such as providing funds to sustain the business during the transition, offering financial support for the deceased's family, and facilitating overall continuity of the business operations. However, addressing pension liability falls outside the typical scope of the key person insurance objectives.