Final answer:
The statement that key person life insurance premiums are a tax-deductible expense for the business is incorrect, as these premiums are not tax-deductible. Other statements about key person insurance being non-taxable upon death, indemnifying the business, and having a cash value from which a business can borrow are correct.
Step-by-step explanation:
The statement regarding key person insurance that is NOT correct is D) Key person life insurance premiums are a tax-deductible expense to the business. This statement is incorrect because, according to tax laws, the premiums paid for key person insurance are not tax-deductible since the business is the beneficiary of the policy, not the individual's family or estate. On the other hand, statement A is correct because typically, the policy's death proceeds received by the business are not taxable, assuming proper notice and consent requirements are met. Statement B accurately describes key person insurance, which is designed to indemnify a business for financial loss due to the death of a critical team member, and statement C is also correct, indicating that a business may borrow from the cash value of a permanent key person life insurance policy if needed.