Question

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

a. The policy is the primary source of income to replace any lost revenue.
b. The policy insures the employee's retirement plan.
c. The policy is not related to group coverage.
d. Policy is owned by the employer.

Answer 1

Answer: Option(b) is correct

Explanation:

Key person insurance is the plan that purchased for the insurance of business  life,key women executive or key man executive of the organization. Insurance policy is paid by the organization as the beneficiary This policy works for key employee or employees because their presence is important for the company's processing.

All the options are correct as this insurance is not for group of employees, coverage of lost income is gained and employer can own the policy as key executive. But this policy does not cover the retirement plan of workers. Thus,option(B) is the inappropriate option.