Who is the beneficiary of a key person insurance policy?

While the insured's spouse may be a beneficiary in personal life insurance policies, key person insurance specifically focuses on protecting the employer’s interests. The spouse does not typically receive benefits from a key person policy because it is intended to safeguard the business rather than provide personal financial support to the insured's family.

Although a business partner might be a beneficiary in certain types of insurance policies, such as buy-sell agreements, key person insurance is not structured for this purpose. The primary aim of key person insurance is to mitigate the financial impact on the employer, not to provide compensation directly to partners.

In the context of a key person insurance policy, the employee themselves cannot be the beneficiary. The policy is meant to provide financial protection to the employer in case of the employee’s untimely death or disability, ensuring the business can manage the operational and financial challenges that may arise.