Which type of beneficiary is commonly used in business life insurance policies?

In the context of business life insurance policies, naming a business as the beneficiary is commonly practiced because it directly addresses financial needs related to the business's interests. When a key employee or owner passes away, the business can face significant financial challenges, including loss of leadership, clients, and income. By designating the business itself as the beneficiary, the policy proceeds can be used to cover costs like replacing the deceased's role, settling debts, or ensuring smooth operations during a transition period.

This structure helps to secure the financial stability of the business, making it easier to manage the impact of the loss. It also avoids complications that could arise from naming individuals or estates, which can lead to delays in accessing funds that are crucial for maintaining business continuity. Trusts, while beneficial in some contexts, are less common as beneficiaries in straightforward business life insurance arrangements since the goal is often to have immediate liquidity available directly to the business entity.