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"Key Person" Insurance subject to ERISA


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Hi all,

I am wondering if "Key Person" Insurance policies are generally subject to ERISA? This is not part of a group policy, only life insurance company offers is 100% paid by company for the owners of the company?

Thanks for any guidance you can give.

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"Key Person" life insurance is usually owned by and payable to the company (to cover the finaicial loss the company would experience from the premature death of the executive).

I don't see any way that can be stretched to be an "employee benefit" (it benefits the company, not the employee) or an "employee benefit plan" and accordingly no ERISA implications.

However, if the insurance is being purchased to informally fund a non-qualified deferred compensation plan then ERISA can apply to that "plan" and hence the need for filing a Top Hat Exemption Letter with DOL.

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