Key Person Life Insurance: Documents Needed in Florida

The documents needed for key person life insurance fall into five groups: business records, proof of the person’s value to the company, the insured’s consent and application facts, corporate approvals, and existing buy-sell records. Gathering them before you apply saves time and reduces errors.

Who Owns, Insures, and Receives a Key Person Policy?

In most key person cases, the business owns the policy, pays the premiums, and is the beneficiary. The insured is an owner, director, officer, partner, or manager of the business or of an affiliate or subsidiary, or a key employee or key person, meaning an individual whose position or compensation is described in s. 101(j)(2)(A)(ii) of the Internal Revenue Code of 1986.

Each role needs paperwork. The owner’s name must match the entity records. The beneficiary designation must match the owner’s authority to name it.

Florida law also limits who may buy coverage on another person. A business may insure its owners, directors, officers, partners, and managers, or those of any affiliate or subsidiary, and its key employees or key persons, when each gives written consent before the policy is bought. The law also bars retaliation against a key employee who says no.

For the full overview, read our key person insurance guide.

Insurance is offered through Nischay Rawal, a licensed insurance agent, separately from the accounting practice of NR CPAs & Business Advisors.

Business Identity and Ownership Documents

An insurer first confirms that the business exists and who owns it. Expect to provide the business’s legal name, tax identification number, and formation papers.

For a Florida corporation, the key records are the current articles of incorporation, the current bylaws, and a list of current directors and officers with business street addresses. The company also keeps a record of its shareholders, showing each shareholder’s address and shares held.

For a Florida LLC, the file usually includes the operating agreement and a current list of members and managers. The LLC keeps these at its principal office or another location.

Ownership records matter because the signer must have authority. If the owners are unclear, the application may stall. Check the ownership ledger before you start.

Records That Show the Person’s Value to the Business

The file should show why the business would lose money if this person died or became disabled. This is the core of insurable interest.

Useful records include the person’s title, duties, and decision-making role. Pair these with the company’s recent financial statements, income statements, and business tax returns. These show how the business depends on the person’s work.

Florida law says an individual has an insurable interest in another person if the individual is closely related to that person by blood or by law and has a substantial interest engendered by love and affection, or if the individual expects a substantial pecuniary advantage through that person’s continued life, health, and safety and would suffer a consequent substantial pecuniary loss by reason of that person’s death, injury, or disability. Business entities have a separate rule. See Fla. Stat. § 627.404.

Use figures from the company’s own records. Keep the coverage amount consistent across every form. Mismatched numbers can slow review.

A CPA can help organize these records and explain how the coverage amount relates to them. The insurer still makes its own decision.

What the Insurer Needs About the Insured Person

The insurer needs the insured’s full legal name, date of birth, address, occupation, and relationship to the business. Accurate details prevent delays later.

The insured must also give written consent. The signature of the proposed insured, having capacity to contract, on the application for insurance counts as that written consent. The consent must be given on or before the time the contract is entered. See Fla. Stat. § 627.404.

Health questions are part of most applications. A fully underwritten policy asks health questions, and issue may depend on insurability. Gather medication lists and medical history before you apply, and answer them fully.

Date of birth matters for pricing. If age is misstated, the benefit is adjusted to what the premium would have bought at the correct age.

Complete, truthful answers protect the policy.

Corporate Approvals, Beneficiary Designations, and Buy-Sell Records

The business needs written approval to buy the policy and name itself as beneficiary. Ask the owners, board, or members to sign a short resolution that covers both points.

The beneficiary designation form must match the policy owner’s name and the approval. A mismatch can hold up the application or the claim.

Buy-sell agreements need careful review. Under Florida law, a shareholder agreement is effective when it is in the articles or bylaws and approved by all shareholders at the time, or when it is signed by all shareholders and made known to the corporation.

Make a list of every other life or disability policy the business holds on the same person. Total coverage matters when you review the new policy.

Tax rules also apply to employer-owned policies. The policyholder must file returns and keep consent records.

What Underwriting Questions Can Stop or Change an Application

Underwriting is the insurer’s review of the application and health information. The insurer decides whether to issue the policy and on what terms.

Insurers commonly review age, health history, tobacco use, medications, and the purpose of the coverage. Answers to these questions shape the decision.

An application can be declined, postponed, or offered with different terms. Health history affects whether a policy issues. Do not guess at answers.

The insurer makes the final underwriting decision. The agent explains the options that are available for the business’s situation. The policy’s benefits, limitations, and exclusions appear in the policy itself.

The NAIC Life Insurance Buyer’s Guide covers questions to ask before buying life insurance. It is a useful read before you gather the file.

Preparing Your File and Taking the Next Step

The documents needed for key person life insurance are easier to collect when you group them. Start with this checklist:

• Business records: articles of incorporation or organization, bylaws or operating agreement, tax identification details, ownership ledger, and recent financial statements.
• Value records: the person’s title and duties, income statements, and business tax returns.
• Insured details: full legal name, date of birth, address, occupation, medication list, medical history, and signed consent.
• Approvals: a written resolution or owner approval, and the beneficiary designation form.
• Existing agreements: buy-sell agreements, shareholder agreements, and a list of other policies on the same person.

A business that depends on one person’s role should start with this list. Ask whether the company would face serious losses if that person died or left. If the answer is yes, the file is a good place to begin.

If that describes your company, gather these papers and contact NR CPAs & Business Advisors to schedule a coverage review. We will walk through your file with you.

Frequently asked questions