11 - Uses of Life Insurance

When calculating the amount of life insurance needed for an income earner, what has to be determined when using the Needs Approach?

The family's financial objectives if the income earner were to die or become disabled

Which of these factors is NOT taken into account when determining an applicant's life insurance needs?

automobile

Key person insurance is intended to

cover business losses due to the death of a key employee

All of these are common personal uses of life insurance EXCEPT

Fund a Buy-Sell agreement

Which of these is a method of determining the level of funds required for ongoing support in the event of the breadwinner's death?

Human life value

Which approach predicts a person's earning potential and determines how much of that amount would be devoted to dependents?

Human life value approach

The Human Life Value concept is based on

Income

Which of the following pieces of information is NOT gathered during the personal financial planning process?

An individual's civic organization memberships

Bob and Tom are partners in a business. If one of them were to die, which of the following would guarantee a market for each of their share of the business?

Buy-Sell agreement

All of the following are examples of a Business Continuation Plan EXCEPT

Deferred Compensation

Buy-sell agreements are typically funded by which two insurance products?

Life insurance and disability insurance

"Life insurance creates an immediate estate". This phrase means:

when the insured dies, a death benefit is paid