{"id":13438,"date":"2026-11-10T17:03:32","date_gmt":"2026-11-10T17:03:32","guid":{"rendered":"https:\/\/nrcpas.com\/life-insurance-guides\/key-person-insurance\/key-person-insurance-employee-consent-to-insure\/"},"modified":"2026-11-10T17:03:40","modified_gmt":"2026-11-10T17:03:40","slug":"key-person-insurance-employee-consent-to-insure","status":"publish","type":"page","link":"https:\/\/nrcpas.com\/life-insurance-guides\/key-person-insurance\/key-person-insurance-employee-consent-to-insure\/","title":{"rendered":"Key Person Insurance: Do You Need Employee Consent?"},"content":{"rendered":"\n
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Key Person Insurance | Florida<\/p>

Protect Your Business Before the Paperwork Starts<\/h1>

Understand the steps that come before a policy is issued, and how key person coverage fits with your tax and cash flow picture.<\/p>

Call us today to schedule a coverage review<\/a><\/div>
Call us today to schedule a coverage review<\/a><\/div><\/div>\n<\/div><\/div>\n\n\n

By Nischay Rawal \u00b7 Published November 10, 2026<\/p>\n\n

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Thinking about buying life insurance on a key employee? You may wonder whether you can skip the employee’s signature. Generally, you can’t, because Florida law ties the business’s right to insure that person to written consent given first.<\/p>\n

The Short Answer: Yes, Written Consent Is Generally Required<\/h2>\n

A business generally needs the employee’s written consent before it applies for life insurance on that employee. Under Fla. Stat. \u00a7 627.404<\/a>, a business entity has an insurable interest in the life, body, and health of its owners, directors, officers, partners, managers, and key employees or key persons if consent is obtained in writing from those key employees or persons before the insurance is purchased. For this purpose, a “key employee” or “key person” is an individual whose position or compensation is described in IRC \u00a7 101(j)(2)(A)(ii)<\/a>. The statute’s definition of business entity includes, but is not limited to, joint ventures, partnerships, corporations, limited liability companies and business trusts.<\/p>\n

It isn’t a step you can fill in later.<\/p>\n

This page covers key person insurance, where the business owns the policy and is named as beneficiary. Our key person insurance<\/a> page explains how that structure fits a business. Personal coverage a person buys on their own life is a different situation, and it’s outside this page.<\/p>\n\n

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If your business depends on a key employee's work and you're weighing a policy on that person's life, reach out to NR CPAs & Business Advisors for a coverage review of the consent steps. Talk it through with our team — we can walk you through how a situation like yours is usually handled and what your options are.<\/p>

Schedule a coverage review<\/a><\/div>
Schedule a coverage review<\/a><\/div><\/div>\n<\/div>\n\n
\"Colleagues<\/figure>\n

Why Insurers Ask for the Employee’s Written Consent<\/h2>\n

Insurers ask because a policy on a person’s life needs that person’s agreement. The same statute says a contract insuring a person may not be carried out unless that person applies for it or consents in writing on or before the time the contract is made. Group life insurance is one of the listed exceptions.<\/p>\n

The law also asks whether the business has a real stake in the person’s life. For a key employee, that stake counts only after the employee has consented in writing before the purchase. The consent is the link that lets the business insure someone else’s life.<\/p>\n

The insurable interest need not exist after the coverage begins, while the written consent must be obtained before the insurance is purchased. IRC \u00a7 6039I<\/a> requires an applicable policyholder that owns employer-owned life insurance contracts issued after the August 17, 2006 enactment of that section to file a return each year those contracts are owned, and to keep records needed to determine whether the requirements of \u00a7 6039I<\/a> and \u00a7 101(j)<\/a> are met. The business must file a return showing whether it has valid consent for each insured employee, or how many employees lacked it, and must keep records. See 26 U.S.C. \u00a7 6039I<\/a>.<\/p>\n

What the Consent Typically Covers<\/h2>\n

Under 26 U.S.C. \u00a7 101(j)(4)<\/a>, employer-owned coverage requires written notice of the maximum face amount, written consent to being insured (including that coverage may continue after employment ends), and written notice that the business will be the beneficiary. Under 26 U.S.C. \u00a7 101<\/a>, for employer-owned coverage to meet the notice and consent requirements, the employee must be told in writing before the contract is issued the most the business could insure them for, must consent in writing to being insured, and must be told in writing that the business will be a beneficiary. Under 26 U.S.C. \u00a7 101<\/a>, the written consent must also state that the coverage may continue after the employee terminates employment.<\/p>\n

Under 26 U.S.C. \u00a7 101<\/a>, written consent is required for employer-owned coverage to meet the notice and consent requirements of paragraph (4) that qualify for the exception, so a verbal okay is not enough for that purpose. The employee’s signature on the application can count as written consent under Fla. Stat. \u00a7 627.404<\/a>, so read what you’re signing.<\/p>\n

Expect the application to include health questions. The insurer reviews the answers and decides whether, and on what terms, to issue the policy. Errors in the insured’s age or sex also matter. Under Fla. Stat. \u00a7 627.456<\/a>, if it is found that the age or sex of the insured has been misstated, the benefit becomes what the premium would have bought at the correct age or sex.<\/p>\n

What Happens If the Business Applies Without Consent<\/h2>\n

Under Fla. Stat. \u00a7 627.404(1)<\/a>, any individual of legal capacity may procure an insurance contract on his or her own life or body for the benefit of any person, but no person may procure or cause to be procured an insurance contract on another individual’s life or body unless the benefits under the contract are payable to the individual insured or the insured’s personal representatives, or to a person who had an insurable interest in the insured when the contract was made; that insurable interest need not exist after the inception date of coverage under the contract. Under \u00a7 627.404(4)<\/a>, if a beneficiary, assignee, or other payee receives benefits from the insurer, because of the insured’s death, injury, or disability, under a contract procured by a person who lacked an insurable interest in the insured when the contract was made, the insured or the insured’s personal representative or other lawfully acting agent may maintain an action to recover those benefits from the person receiving them. The policy generally cannot go forward on that basis.<\/p>\n

A missing consent breaks that link.<\/p>\n

If premiums are already being paid, raise the consent gap right away. Address it before you rely on the policy.<\/p>\n

From Signed Consent to an Issued Policy<\/h2>\n

In key person coverage, the business owns the policy and is named as beneficiary. The usual order runs from consent to application, then underwriting, then issue.<\/p>\n

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  1. The business and the employee sign the consent.<\/li>\n
  2. The application goes to the insurer with the signed consent.<\/li>\n
  3. The insurer underwrites the file, including the application and health answers.<\/li>\n
  4. If approved, the insurer issues the policy.<\/li>\n<\/ol>\n

    The employee’s signature doesn’t change who owns the policy. The business does, and the business receives the death benefit as beneficiary.<\/p>\n

    The tax view is brief. Under 26 U.S.C. \u00a7 264<\/a>, no deduction is allowed for premiums on a life insurance policy if the taxpayer is directly or indirectly a beneficiary under it. So the business generally can’t deduct those premiums. Under 26 U.S.C. \u00a7 101(j)(1)<\/a>, the amount of death proceeds an applicable policyholder can exclude from gross income under an employer-owned life insurance contract may not exceed the sum of the premiums and other amounts it paid for the contract. The exceptions in \u00a7 101(j)(2)<\/a> that switch off that limit are available only if the notice and consent requirements of \u00a7 101(j)(4)<\/a> are met before the contract is issued, so missing those requirements can leave proceeds above that amount taxable.<\/p>\n

    Premiums, terms and any age-based changes come from the insurer’s issued contract. Confirm them during the process, and plan the premium payments into your cash flow before you commit.<\/p>\n

    Related Questions Business Owners Ask Next<\/h2>\n

    The next questions usually concern how the policy fits the business, estate planning, and owners abroad. Read estate planning life insurance for how policy proceeds may interact with estate tax. Owners with overseas shareholders or key employees who travel can read NRI life insurance and the death while traveling abroad page.<\/p>\n

    Can a company insure an employee’s life without the employee knowing?<\/summary>

    Generally no. Florida law requires the employee’s written consent before the business buys coverage on a key employee.<\/p><\/details>

    Does the employee have to sign anything?<\/summary>

    Generally yes. The employee’s signed application can count as written consent under Florida law.<\/p><\/details>

    Can an employee refuse to consent?<\/summary>

    Yes. A business may not retaliate or take adverse action against a key employee who refuses consent.<\/p><\/details>

    Are premiums tax deductible for the business?<\/summary>

    Generally not, when the business is the beneficiary. Federal law denies a deduction for those premiums.<\/p><\/details>\n\n

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    Not sure what your next step is?<\/h3>

    Talk it through with our team — we can walk you through how a situation like yours is usually handled and what your options are.<\/p>

    Schedule a coverage review<\/a><\/div>
    Schedule a coverage review<\/a><\/div><\/div>\n<\/div>\n\n
    \"Colleagues<\/figure>\n

    Talk Through Your Key Employee Situation<\/h2>\n

    If a key employee’s work, client relationships or know-how keeps your business running, a policy on that person’s life may be on your mind. Nischay Rawal, a licensed insurance agent, can walk you through the consent form and the steps from application to issue. Insurance is offered by the licensed agent, separately from the accounting practice. Reach out through the NR CPAs & Business Advisors contact page<\/a> to set up a coverage review for your business.<\/p>\n\n<\/article>\n