Why does Beverly want key employee disability insurance?

Why does Beverly want key employee disability insurance?

• A. It will pay cash benefits to the employee if they are disabled.
• B. It will pay cash benefits to the employer if a key employee is disabled.
• C. It provides funding for training a replacement.
• D. It ensures the employee will retain their position after recovery.

Answer: (B)

Key employee disability insurance is designed to protect a business in the event that a key employee becomes disabled and cannot perform their duties. The primary purpose of this type of insurance is to provide financial support to the employer, not directly to the employee. When a key employee is disabled, the insurance pays benefits to the employer to help cover the financial impact of losing that employee, which may include lost revenue, costs associated with hiring a temporary worker, and potential training of a replacement. The correct focus of this insurance is on the employer's needs for financial relief as they navigate the difficulties of losing a key member of their team. Thus, it enables the employer to maintain business continuity during the employee’s absence, ensuring that the operations can continue despite the setback.

Key employee disability insurance is designed to protect a business in the event that a key employee becomes disabled and cannot perform their duties. The primary purpose of this type of insurance is to provide financial support to the employer, not directly to the employee. When a key employee is disabled, the insurance pays benefits to the employer to help cover the financial impact of losing that employee, which may include lost revenue, costs associated with hiring a temporary worker, and potential training of a replacement.

The correct focus of this insurance is on the employer's needs for financial relief as they navigate the difficulties of losing a key member of their team. Thus, it enables the employer to maintain business continuity during the employee’s absence, ensuring that the operations can continue despite the setback.