Oklahoma Life Producer Practice Exam

What is one benefit of Key Employee Life insurance for businesses?

1. Direct employee benefits

2. Tax-free investment returns

3. Protection against loss of key personnel

4. Higher interest earnings

The correct answer is: Protection against loss of key personnel

Key Employee Life insurance is specifically designed to protect businesses from the financial repercussions that can arise from the loss of a key employee, such as an owner, executive, or a person with specialized skills critical to the success of the organization. If a key employee were to pass away, the business would face potential loss of revenue, disruption of operations, and the challenge of finding a suitable replacement. This type of insurance provides the business with a death benefit that can help cover costs associated with the loss, such as recruitment and training of a new employee, repaying debts, or maintaining ongoing operations while recovering from the loss. As a result, having Key Employee Life insurance in place serves as a financial safety net, allowing the business to navigate the transition without undue stress on its financial stability. This aspect underscores its primary benefit: safeguarding the company against the adverse effects of losing its key personnel.