The Business Council strongly supports this legislation, which would allow New York's employers to purchase group contracts of key person life insurance coverage for its employees. Current law limits purchasing of key person coverage only on an individual, per-employee basis. With this legislation, employers would realize administrative savings that come from purchasing group coverage.
Key person life insurance is purchased by a business on the lives of certain, essential employees of a company to ensure compensation to the business in the event of the death of one of these employees. It is commonly used by many of the nation's largest companies that may have many key employees, and the proceeds from these policies are often used as a financing vehicle for employee and retiree health benefits. New York, however, is the only state where employers are not authorized to purchase key person coverage as a group contract.
Under this legislation, employee disclosure requirements guaranteed by existing law would be preserved, ensuring that the employee is properly informed about the life insurance contract and coverage provisions.
This legislation will help reduce the cost of doing business by avoiding the administrative burden and expense of having to individually underwrite each life insured under a key person contract. Accordingly, The Business Council of New York State, Inc. strongly urges the passage and enactment into law of S. 5138/A.7896.