Who is responsible for paying the premiums on a Key Person Life Insurance Policy?

In a Key Person Life Insurance Policy, the employer is responsible for paying the premiums. This type of insurance is taken out by a business to protect itself against the potential loss of a key employee whose absence could significantly impact the company’s operations and financial stability. The employer, as the policyholder, pays the premiums and is also the beneficiary, receiving the death benefit if the insured key person passes away.

This arrangement allows the company to have the necessary funds to cover costs associated with the loss of the key individual, such as hiring a replacement or compensating for lost revenue. Therefore, the responsibility for premium payments falls squarely on the employer, reflecting the business's interest in maintaining its operational integrity in the face of the loss of a crucial employee.