AD Banker Comprehensive Practice Exam

Under a Key Employee Disability Income Policy, who is the employer considered to be?

1. All of the answers listed

2. Recipient of the proceeds

3. Premium Payor

4. Policyowner

The correct answer is: All of the answers listed

In the context of a Key Employee Disability Income Policy, the employer holds a central role in several capacities. The employer is typically the policyowner, meaning they have control over the policy and its provisions. This control includes the ability to make changes to the policy or to its beneficiaries. Additionally, the employer is the premium payor, responsible for paying the insurance premiums to keep the policy active. This responsibility ensures that coverage is maintained for the key employee, who may be critical to the organization's operations. Furthermore, the employer is often the recipient of the proceeds from the policy if the specified key employee becomes disabled. This enables the business to receive financial support to mitigate the impact of the key employee’s absence, helping to cover expenses and provide stability during a challenging time. The inclusion of all these roles that the employer plays within a Key Employee Disability Income Policy justifies the selection of the option that states "All of the answers listed." Each function—policyowner, premium payor, and recipient of proceeds—contributes to the overall purpose of the policy: to protect the business from potential loss resulting from the disability of a key employee.