Who benefits from Key Person Disability Insurance payments?

Key Person Disability Insurance is designed to provide financial protection for a business in the event that a key employee becomes disabled and is unable to work. The primary beneficiary of the insurance payments is the employer, as they are the ones who purchased the policy and pay the premiums. These payments help cover lost revenues, fund the hiring of a replacement, and mitigate potential financial losses that might occur due to the absence of that key employee.

While the employee who becomes disabled is the one affected by the incident, they do not receive the insurance payments directly. Instead, the payments support the business's continuity and help manage the transition, ensuring the company can navigate the financial impact of the key person's inability to perform their role. Thus, the employer stands to benefit from the financial security that the insurance provides during a challenging time.