{"id":8785,"date":"2026-11-02T04:51:17","date_gmt":"2026-11-02T04:51:17","guid":{"rendered":"https:\/\/nrcpas.com\/life-insurance-guides\/key-person-insurance\/key-person-insurance-notice-and-consent-101j\/"},"modified":"2026-11-04T01:36:18","modified_gmt":"2026-11-04T01:36:18","slug":"key-person-insurance-notice-and-consent-101j","status":"publish","type":"page","link":"https:\/\/nrcpas.com\/life-insurance-guides\/key-person-insurance\/key-person-insurance-notice-and-consent-101j\/","title":{"rendered":"Key Person Insurance Notice and Consent 101(j) Guide"},"content":{"rendered":"\n
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Key Person Insurance | Miami and Florida<\/p>

Key Person Insurance Notice and Consent: A Plain-Language 101(j) Guide<\/h1>

A guide from NR CPAs & Business Advisors for Florida business owners weighing key person coverage, with a CPA's view of the tax and cash flow questions that come with it.<\/p>

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By Nischay Rawal \u00b7 Published November 1, 2026<\/p>\n\n

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Before the policy is issued, the employer must give the insured written notice and get the insured’s written consent. This guide explains those steps in plain words, the exceptions they unlock, and what a business should plan for. NR CPAs & Business Advisors is a Miami CPA firm. Insurance is offered by its licensed insurance agent, Nischay Rawal, separately from the accounting practice.<\/p>\n

What IRC 101(j) Notice and Consent Means for a Key Person Policy<\/h2>\n

IRC 101(j)<\/a> sets notice and consent conditions for employer-owned life insurance, often called EOLI. The statute defines the “applicable policyholder” as the person who owns the contract.<\/p>\n

Employer-owned life insurance is a life policy a business owns and is beneficiary of, on the life of an employee, director, or owner.<\/p>\n

A key person policy is a common setting for these rules. It insures someone whose death would hurt company revenue or operations. The Insurance Information Institute guide<\/a> explains that key person coverage helps a business absorb financial losses from a key employee’s death or disability.<\/p>\n

Life insurance death benefits are generally not taxable income, according to the IRS life insurance proceeds FAQ<\/a>. Section 101(j) changes that picture for employer-owned policies that do not meet its conditions. Whether a particular payout is taxable depends on the facts of the policy, the business entity, and the insured’s role.<\/p>\n\n

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If a policy on a key employee or owner is on your company's table, our team can walk through the notice and consent steps with you in a coverage review. 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>

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The Written Notice and the Employee’s Written Consent<\/h2>\n

Before the policy is issued, the employee must receive written notice and give written consent. Section 101(j)(2) states that, for an employer-owned life insurance contract that meets the notice and consent requirements of paragraph (4), the limit on the amount excluded from the policyholder’s gross income does not apply to certain amounts, including amounts received because of the death of an insured based on the insured’s status (IRC \u00a7 101<\/a>).<\/p>\n