10- Uses of Life insurance

Company X

A Key Employee policy is taken out by company X on its Vice President. Ten years later, the 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?

6

A Loss-Purchase Buy and Sell agreement among three partners, funded with individual life insurance, would require how many policies?

ABC is the policy owner, C is the insured, and ABC is the beneficiary

C is a key employee at ABC inc. If a Key Employee life policy is purchased on her life, which of these statements would be true?

Each partner must own a policy on the other partners

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?

tax-deductible to the employer

The premiums paid by an employer for his employees group life insurance are usually considered to be:

Fund a buy-sell agreement

What is considered a valid reason for small businesses to insure the lives of its major shareholders?

Establishes the needs of the individual and his dependents

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?

Self- Maintenance expenses

Which of these factors does NOT influence an applicants need for life insurance?

If both parents were to die, it would provide death benefit to the child

Which of these is NOT a reason for purchasing life insurance on the life of a minor?

The beneficiary is named by the key employee

Which statement regarding a Key Employee Life policy is NOT true?

It is used extensively in estate-planning as well as business circumstances

Which statement regarding third-party ownership of life insurance policy is true?

Split-dollar plan

Which type of plan allows an employer to give money to an employee for buying a lifetime insurance policy and also permits the employee to select the beneficiary?