Chapter 10- Uses of Life

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 considered to be a cost connected with an individual's death?

Business expenses

An architecture firm would stand to lose a lot of money in the event of the death of its project manager. Which type of policy should the firm purchase on its project manager?

Key Person Life Policy

Which of these factors does not influence an applicant's need for life insurance?

Self-Maintenance expenses

Three law partners form a Cross-Purchase Buy and Sell agreement. This agreement is funded with individual life insurance. How many total life policies are needed for this agreement?

6

Which of these is NOT a reason for a business to buy key person life insurance?

A pension deficiency if the key employee dies

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

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

K is an insured under a life insurance policy owned by a third party. Which of these statements is true?

K has no ownership rights

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 beneficiary is named by the key employee

The premiums paid by an employer for his employee's group life insurance are usually considered to be

tax-deductible to the employer