{"id":6208,"date":"2026-10-27T07:32:36","date_gmt":"2026-10-27T07:32:36","guid":{"rendered":"https:\/\/nrcpas.com\/life-insurance-guides\/key-person-insurance\/how-to-file-key-person-life-insurance-claim\/"},"modified":"2026-10-29T23:31:20","modified_gmt":"2026-10-29T23:31:20","slug":"how-to-file-key-person-life-insurance-claim","status":"publish","type":"page","link":"https:\/\/nrcpas.com\/life-insurance-guides\/key-person-insurance\/how-to-file-key-person-life-insurance-claim\/","title":{"rendered":"How to File a Key Person Life Insurance Claim"},"content":{"rendered":"\n
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Key Person Life Insurance | Miami, Florida<\/p>

Filing a Key Person Life Insurance Claim? Start With Clear Steps<\/h1>

A plain-language guide from NR CPAs & Business Advisors to the paperwork, ownership records and tax questions that come up when key person life insurance pays out. Insurance is offered by Nischay Rawal, a licensed insurance agent, separately from the accounting practice.<\/p>

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Call us today<\/a><\/div><\/div>\n<\/div><\/div>\n\n\n

By Nischay Rawal \u00b7 Published October 27, 2026<\/p>\n\n

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To file a key person life insurance claim, the company that owns the policy confirms the coverage, notifies the insurer, sends the forms the insurer requires and waits for payment under the policy terms. The company, not the family, is normally the owner and beneficiary, so the company does the filing. This guide walks through each step in order, along with the tax and bookkeeping questions a CPA will raise. Florida businesses have specific rules to check along the way.<\/p>\n

What a Key Person Life Insurance Claim Is<\/h2>\n

A key person life insurance claim is the company’s request for the death benefit on a policy it owns. The policy insures an employee or owner whose death would cause the business a financial loss. The Insurance Information Institute<\/a> describes key person coverage as protection that compensates a business for financial losses caused by a key employee’s death or disability.<\/p>\n

The insured person does not receive the money. The company pays the premiums while the policy is in force. If the insured dies while the policy is in force, the insurer pays the death benefit to the company as beneficiary.<\/p>\n

Key person coverage is usually written as term life or permanent whole life insurance. The NAIC life insurance buyer’s guide<\/a> explains the difference between term and permanent coverage. The policy type changes the claim file. A term policy may have no cash value or loan history to review. A whole life policy may have both, and the company must check them.<\/p>\n

For how this coverage is set up before any claim, see our key person life insurance guide. Insurance is offered through Nischay Rawal, a licensed insurance agent, separately from the accounting practice. Each insurer sets its own claim rules, so treat the steps below as general guidance.<\/p>\n\n

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If you are working through how to file a key person life insurance claim for your company, we can help you organize the policy file. 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

Step 1: Confirm the Policy Is In Force and Who Owns It<\/h2>\n

Start by confirming the policy was in force on the date of death and that the company is listed as both owner and beneficiary. Pull the original contract, the policy number, the insurer’s name and the face amount. Those details anchor every later step.<\/p>\n

Check the premium history next. Florida law requires a grace period of at least 30 days to pay any premium after the first, and the policy stays in force during that grace period. If a premium was late, find the notices and the dates they were sent and paid.<\/p>\n

Look for loan or lapse notices too. Compare the insured’s name and date of birth to the policy, because small mismatches slow claims. Note the issue date, since it affects how long the insurer can look at the application (see Step 5).<\/p>\n

Finally, pull the key person’s written consent. Florida law requires that a business get written consent from a key person before buying coverage on that person’s life, and the business may not retaliate against someone who refuses (Fla. Stat. \u00a7 627.404<\/a>). If the consent is missing from the file, raise it with your CPA before the claim goes further.<\/p>\n

Step 2: Notify the Insurer and Request the Claim Forms<\/h2>\n

Contact the insurer that issued the policy as soon as you can. State that the company is filing a claim on the death of the insured under a key person policy. Ask for the insurer’s own claim forms and a written list of every document it requires.<\/p>\n

Each insurer sets its own requirements, so do not assume a form from another company will work. Write down the date of each call, the representative’s name and what was requested. Keep this log with the policy file.<\/p>\n

Send all forms in writing and keep copies of everything you send. Do not sign an insurer form until someone has checked it against the policy. A signed form with a wrong company name or tax number can delay the file.<\/p>\n

Documents the Insurer Will Usually Ask For<\/h2>\n

Most insurers ask for a small set of core documents. Expect a certified copy of the death certificate from the official office where the death was recorded. Expect a claim form signed by an officer who has authority to act for the company. The form should show the company’s exact legal name and its tax identification number.<\/p>\n

The insurer will also want a copy of the policy, the policy number, and any amendments or riders. If the signing officer’s authority is not clear, the insurer may ask for a board resolution or officer certificate.<\/p>\n

Some insurers request more information about how the death happened. That can include medical or accident records the insurer is allowed to review. Respond with only what the insurer asks for, and in writing.<\/p>\n

Missing or mismatched documents cause many claim delays. Check the file against the insurer’s list before you send it. Compare every name, number and date line by line.<\/p>\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

How the Insurer Reviews the Claim<\/h2>\n

The insurer reviews the policy and the claim documents before it pays. It may send follow-up questions. Answer them in writing and keep a dated record of each exchange.<\/p>\n

Florida law sets a two-year limit on challenging a life policy. The policy must be incontestable after it has been in force during the insured’s lifetime for 2 years from its date of issue, with exceptions such as nonpayment of premiums (Fla. Stat. \u00a7 627.455<\/a>). Fla. Stat. \u00a7 627.455<\/a> reads: “Every insurance contract shall provide that the policy shall be incontestable after it has been in force during the lifetime of the insured for a period of 2 years from its date of issue except for nonpayment of premiums and except, at the option of the insurer, as to provisions relative to benefits in event of disability and as to provisions which grant additional insurance specifically against death by accident or accidental means.”<\/p>\n

Florida law also addresses interest on lump-sum death payments. When a policy pays its proceeds in a lump sum, the payment must include interest. The interest runs from the date the insurer receives written due proof of death, at an annual rate equal to or greater than the Moody’s Corporate Bond Yield Average as of the day the claim was received (Fla. Stat. \u00a7 627.4615<\/a>). Keep the date your proof of death reached the insurer.<\/p>\n

The insurer, not the agent or the accounting firm, decides whether and how much is paid under the policy terms.<\/p>\n

Receiving and Using the Death Benefit<\/h2>\n

The company receives the death benefit as beneficiary. It then decides how to use the money under its own governing documents and obligations.<\/p>\n

Businesses often plan proceeds for a few common needs. Examples include covering lost revenue during a transition, recruiting a replacement, or meeting a debt or buy-out obligation. A policy does not guarantee any particular result from these choices.<\/p>\n

Before funds arrive, confirm in writing how the insurer will pay. Ask about the payment method, the timing and any settlement option the policy offers. Get those answers before the company commits the money.<\/p>\n

Record the receipt in the company’s books according to its accounting method and the date the payment was received. Your CPA can help match the entry to the payment terms.<\/p>\n

Tax and Accounting Questions a CPA Will Raise<\/h2>\n

Premiums on business-owned key person coverage are generally not deductible. Federal law denies a deduction for life insurance premiums when the taxpayer is directly or indirectly a beneficiary under the policy or contract (26 U.S.C. \u00a7 264<\/a>). That rule affects how the company records past premium payments.<\/p>\n

Whether that exception fits depends on the facts of the policy and the people it covers.<\/p>\n

Under the general rule, proceeds paid because of the insured’s death are not counted as gross income (26 U.S.C. \u00a7 101(a)<\/a>), but for an employer-owned life insurance contract, the exclusion is capped at the premiums and other amounts the policyholder paid, subject to the exceptions set out in 26 U.S.C. \u00a7 101(j)<\/a>. Interest paid on proceeds left with the insurer is taxable, so track any interest separately.<\/p>\n

Federal law also sets notice and written consent requirements for the employee.<\/p>\n

Review the cash surrender value and any policy loans before the claim is booked. Bring the policy file and the company’s books to your CPA. Tax treatment turns on the facts of your case.<\/p>\n\n

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Have questions about what happened?<\/h3>

Ask our team directly. Tell us what you are dealing with and we will explain how the process works from here.<\/p>

Talk to our team<\/a><\/div>
Talk to our team<\/a><\/div><\/div>\n<\/div>\n

Talk with NR CPAs About Your Business’s Claim<\/h2>\n

A key person’s death is hard for the company, its owners and its team. The claim paperwork often arrives in that same stretch. You may be handling the file for a co-owner or family member while still learning how it works.<\/p>\n

NR CPAs & Business Advisors, a Miami CPA firm, serves Florida businesses and business owners, including Indian-American business owners across the United States. Insurance is offered through Nischay Rawal, a licensed insurance agent, separately from the accounting practice.<\/p>\n

Common Questions<\/h3>
Who files a key person life insurance claim?<\/summary>

The company that owns the policy and is its beneficiary normally files it.<\/p><\/details>

How long can an insurer challenge a Florida life policy?<\/summary>

Under Florida law, a life policy generally becomes incontestable after two years from its date of issue, with some exceptions.<\/p>

If you are working through how to file a key person life insurance claim for your company, we can help you organize the policy file. Our team can arrange a coverage review<\/a> of the policy and the claim steps, with the company’s documents in hand.<\/p><\/details><\/article>\n