Question

All of the following are correct regarding Key Person Insurance, except:

A. The policy can be term or permanent
B. The policy is source of funds to replace any lost revenue
C. The policy primarily insures the employee's retirement plan
D. The policy is owned by the employer

Answer 1

Key Person Insurance is a type of insurance policy taken out by a business on the life of a key employee. It is designed to protect the business from financial loss in case of death or disability of that key employee. The correct option is C.

Step-by-step explanation:

Key Person Insurance is a type of insurance policy that is taken out by a business on the life of a key employee. It is designed to protect the business from financial loss in the event of the death or disability of that key employee.

Option C is incorrect because Key Person Insurance does not primarily insure the employee's retirement plan. Its main purpose is to provide funds to replace any lost revenue, cover the cost of hiring and training a replacement, and help the business continue its operations smoothly.

Options A, B, and D are all correct regarding Key Person Insurance. The policy can be either term or permanent, it is a source of funds to replace lost revenue, and it is typically owned by the employer.