In a Key Person Life Insurance Policy, who serves as the owner and beneficiary?

In a Key Person Life Insurance Policy, the employer serves as both the owner and beneficiary of the policy. This type of insurance is designed to protect a business from the financial impact of losing a key employee who plays a critical role in its success, such as a top executive or a highly skilled specialist.

By being the owner of the policy, the employer has control over it, including the right to make changes or terminate it. Moreover, as the beneficiary, the employer receives the death benefit when the key person passes away, which can be used to cover expenses associated with the loss such as hiring and training a replacement, settling debts, or addressing any loss of revenue caused by the absence of the key employee.

Other roles like the employee, insurer, or policyholder would not be correct in this context, as the employee does not have ownership or beneficiary rights in the policy meant to protect the employer’s interests, the insurer is the entity providing the insurance coverage, and the term policyholder typically refers to the individual who purchases the insurance but does not specifically address the context of a key person policy where the employer takes on that dual role.