No. HB 261
Filed under Insurance.
Restrictions on Employer-owned Life Insurance Policies; Authorizes employer-owned life insurance policies covering key persons of business entities, organizations, companies, & corporations under certain circumstances; requires certain disclosures to key persons; prohibits employer-owned life insurance policies covering certain employees; provides that policies covering such employees are void as against public policy; requires insurer notice to OIR of employer-owned life insurance policies; requires office to maintain registry & publish annual report; provides that premiums, loan interests, & expenses related to employer-owned life insurance are not tax deductible; subjecting death benefits received by employers to corporate income tax; requires OIR to adopt certain standard forms.
Plain English Summary
AI-GENERATEDEmployers can no longer insure ordinary employees for their own benefit. Coverage on regular workers is banned outright, and any existing policy on one becomes void unless the employee's family opts in and becomes the sole beneficiary.
Executives, owners, and managers can still be insured, but only with their written, revocable consent, notice to their family, and a death benefit capped at five times their average salary.
Insurers must report every policy to state regulators, who keep a public registry. Premiums lose their tax deduction, and payouts to the employer can be taxed as corporate income.
Violators face real penalties: employers owe civil fines up to five times the benefit, families can sue directly for the full payout, and insurers risk a $1 million fine per policy plus losing their license.
AIAn employer can no longer purchase, keep, or collect on a life insurance policy that names a regular, non-executive employee as the insured. This applies regardless of whether the employee ever consented.
AIThe rank-and-file ban and the key-person conditions apply not only to new policies but to coverage already in force, sweeping in arrangements employers set up long before this law existed.
AIBefore insuring a key person, an owner, executive, director, officer, partner, or manager whose death would financially harm the business, the employer must get that person's informed written consent, which the person may revoke later.
AIA policy on a key person cannot pay the employer more than five times that person's average annual pay, limiting how much a company can collect from an executive's death.
AIA policy that fails to meet the rank-and-file ban or the key-person conditions is not merely improper; it is legally void, so the employer cannot enforce it or collect on it.
AIAn insurer that knowingly writes or administers a policy that breaks this law risks a fine of up to $1 million for each violation and can have its authority to sell insurance in Florida suspended.
AIWithout state approval, an employer may only hold key-person policies on its five highest-ranking people by seniority, salary, and benefits. Insuring anyone else who otherwise fits the key-person definition needs the insurance office's sign-off first.
AIEmployers can no longer deduct the premiums, loan interest, or related costs of an employer-owned life insurance policy under state law, raising the net cost of holding one.