In a key employee life insurance policy, who is the applicant and policyholder?

In a key employee life insurance policy, the corporation is both the applicant and the policyholder. This type of insurance is designed to protect a business from the financial impact that could arise from the loss of a key employee, such as a top executive or critical specialist.

The corporation applies for the insurance policy because it has a financial interest in the continued presence of that key employee, as their absence could result in significant losses or operational disruptions. As the policyholder, the corporation is responsible for paying the premiums and maintaining control over the policy.

Furthermore, the corporation designates a beneficiary, typically itself, who would receive the death benefit upon the passing of the key employee. This setup reinforces the corporation's investment in its key personnel and ensures that the business has funds available to manage the transition or replacement of the employee.