Key Employee Insurance is designed to do which of the following for a business when a key employee becomes disabled?

Key Employee Insurance is designed to do which of the following for a business when a key employee becomes disabled?

• A. Pays a benefit to the business when a key employee becomes disabled by helping pay for a replacement, train a new employee, or replace loss of revenue due to the disabled employee's lack of ability to work.
• B. Pays benefits to the employee's family after death
• C. Provides group coverage only for the employee
• D. Covers only medical expenses of the employee

Answer: (A)

Key Employee Insurance that covers disability is meant to shield the business from the financial hit when a critical employee can’t work. The policy pays a benefit to the business, not to the employee, and those funds are used to keep operations moving—hiring or training a replacement and offsetting any revenue loss while the key person is out. So the best choice reflects that purpose: a payout to the business to cover replacement costs, training, and lost revenue due to the disabled key employee. It isn’t about paying a family after death (that’s life insurance), it isn’t merely group coverage for the employee, and it isn’t designed to pay only medical expenses.

Key Employee Insurance that covers disability is meant to shield the business from the financial hit when a critical employee can’t work. The policy pays a benefit to the business, not to the employee, and those funds are used to keep operations moving—hiring or training a replacement and offsetting any revenue loss while the key person is out.

So the best choice reflects that purpose: a payout to the business to cover replacement costs, training, and lost revenue due to the disabled key employee. It isn’t about paying a family after death (that’s life insurance), it isn’t merely group coverage for the employee, and it isn’t designed to pay only medical expenses.