Who Pays for Key Person Life Insurance and Who Gets the Money?

When small business owners begin exploring corporate insurance strategies, they frequently get confused by basic policy terminology. They hear terms like owner, insured, and beneficiary thrown around interchangeably by insurance agents, leading to sloppy policy design and unexpected tax consequences. A life insurance contract is a formal legal agreement governed by strict contract laws. To structure a corporate policy correctly, you must understand that every contract contains three distinct legal roles, and how you arrange those three roles determines who controls the asset, who pays the premiums, and who receives the tax-free payout.