Chapter 8: Uses of Life Insurance

Cross-purchase agreement

Which of the following disability buy-sell agreements is best suited for businesses with a small number of partners?

help offset the cost of finding and training a replacement if the employee dies

Employers often purchase life insurance on a key employee in order to

Employee benefits

When using the needs approach for life insurance planning, lump sums may be created for all of the following reasons EXCEPT

An increased pension liability if the key employee dies

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

Self-maintenance expenses

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

pay for unexpected expenses

According to the needs approach, an emergency reserve fund's primary purpose is to

how much life insurance a client should apply for

With life insurance, the needs approach is used primarily in determining

Split-dollar

XYZ Corp gives money to an employee to purchase a life insurance policy and allows the employee to select the beneficiary. What kind of plan is this?

Local unemployment rates

Which of these is NOT relevant when determining the amount of personal life insurance needed?

tax-deductible to the employer

The premiums paid by an employer for his employee's 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?

Identifies the needs of the individual and his/her 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?

Business expenses

Which of these is NOT considered to be a cost connected with an individual's death?

Unemployment tax expenses

Which of the following is NOT considered to be an expense for surviving family members of a deceased wage earner?