In general, it can be described as an insurance policy taken out by a business on the loss of a key income generator, in other words a Key Person. This can cover death or diagnosis of a specified critical illness.
For example, the person could be a director of the company, a partner, a key sales person, key project manager, or someone with specific skills or knowledge which is especially valuable to the company.
The employer does this to offset the costs such as hiring temporary staff or to recruit a successor and to compensate the business for any financial loss to enable business continuity.
The policy is owned and paid for by the employer which means that any payout is payable to the employer.