Notice and consent refers to the formal process by which an employer informs an employee that the employer intends to purchase life insurance on the employee's life and obtains the employee's written consent before the policy is issued. In the United States, Internal Revenue Code Section 101(j) requires specific written notice and consent for employer-owned life insurance policies to ensure that death benefits qualify for favorable tax treatment. The notice must disclose the maximum face amount, state that the employer will be the beneficiary, and explain that coverage may continue after employment ends. The employee must consent in writing before the coverage is placed. Proper notice and consent documentation is essential for avoiding taxable death benefits and for demonstrating that the insurance arrangement is transparent and compliant with applicable federal rules. From a broader planning perspective, this feature interacts with product guarantees, regulatory rules, and carrier administration. Advisors rely on it when explaining long-term policy performance, stress-testing scenarios, and avoiding unpleasant surprises for clients. When policies are reviewed years after issue, a clear understanding of how this concept works in the contract helps teams decide whether to keep, modify, or replace existing coverage in a way that supports the client's goals and respects tax and compliance boundaries.

In practice, advisors and employers handle notice and consent as part of the application package when setting up key-person insurance, nonqualified plan funding, or broader employer-owned life insurance programs. Carriers provide standardized forms to capture employee signatures and document the required disclosures. Advisors educate business owners that failure to follow notice and consent rules could cause otherwise tax-free death benefits to become taxable as ordinary income. During audits or due diligence for mergers and acquisitions, corporate counsel often reviews notice and consent records to confirm Section 101(j) compliance. When policies were issued before these rules took effect, or when records are incomplete, advisors may work with tax counsel to assess exposure and consider corrective steps where possible. In everyday practice, producers, BGAs, and home-office teams return to this concept when files become complex or when clients request changes that affect cash value, risk, or compliance. Training sessions, field manuals, and webinars often highlight it as a recurring theme so that advisors develop consistent language when speaking with clients, CPAs, and attorneys. This shared understanding reduces errors, speeds up case handling, and builds trust because everyone involved can clearly explain what is happening and why.