Which type of plan allows an employer to give money to an employee for buying a life insurance policy and also permits the employee to select the beneficiary? |
Split-dollar plan |
Which statement regarding a Key Employee Life policy is NOT true? The application must be signed by the key employee |
The beneficiary is named by the key employee |
A Loss-Purchase Buy and Sell agreement among three partners, funded with individual life insurance, would require how many policies? |
6 |
C is a key employee at ABC Incorporated. If a Key Employee life policy is purchased on her life, which of these statements would be true? |
ABC is the policyowner, C is the insured, and ABC is the beneficiary |
Company Z has a Cross Purchase Buy-Sell Agreement in place among its three founding partners. If the agreement is funded with individual life insurance, what would it require? |
Each partner must own a policy on the other partners |
In life insurance, the needs approach is used mostly to establish |
how much life insurance a client should apply for |
In a Key Employee life insurance policy, the third-party owner can be all of the following EXCEPT |
insured |
An engineering firm that would suffer financially from the death of a project manager should purchase a |
Key Person Life Policy |
Which of these is NOT a reason for purchasing life insurance on the life of a minor? |
If both parents were to die, it would provide death benefits to the child |
Two partners own equal shares in a business worth a total of $1,000,000. If they both commit to the purchase of a life insurance policy that will fund a Buy-Sell Agreement, which of the following is TRUE? |
Each partner owns a $500,000 policy on their partner’s life |
When an individual is planning to protect his family with life insurance, one method of doing so is called needs analysis. What exactly does needs analysis involve? |
Establishes the needs of the individual and his dependents |
Which of these factors does NOT influence an applicant’s need for life insurance? |
Self-maintenance expenses |
Which of these is NOT relevant when determining the amount of personal life insurance needed? Existing life insurance coverage |
Local unemployment rate |
The premiums paid by an employer for his employee’s group life insurance are usually considered to be |
tax-deductible to the employer |
Which of these is NOT considered to be a cost connected with an individual’s death? Funeral expense |
Business expenses |
Which statement regarding third-party ownership of a life insurance policy is true? Beneficiary is required to be irrevocable |
It is used extensively in estate-planning as well as business circumstances |
A Key Employee policy is taken out by Company X on its vice president. Ten years later, this employee leaves Company X and begins working for Company Y. If this individual were to die and the policy is still in force and unchanged, where would the death proceeds be directed? |
Company X |
Which of these is NOT a reason for a business to buy key person life insurance? |
A pension deficiency if the key employee dies |
What is considered a valid reason for small businesses to insure the lives of its major shareholders? |
Fund a buy-sell agreement |
Chapter 10 – Uses of Insurance
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