Chapter 11 quiz

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

6

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

A pension in deficiency if the key employee dies.

ABC company takes out a key employee policy on its CEO. The CEO leaves ABC company and begins working for XYZ company 5 years later. If this person were to die and the policy is still in force and unchanged, where would the death proceeds be directed?

ABC company.

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

Business expenses

A key employee 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 proceed to be directed?

Company X

A cross purchase buy sell agreement is ok place for ABC company's four founding partners. What would this agreement require if the agreement is funded with individual life insurance?

Each partner must own a policy on the other partners.

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

A life insurance policy owned by a third party:

Is used largely in estate-planning as well as business situations.

With key employee life insurance:

The company is the owner of the policy.

All of these statement concerning a Leo employee life policy is true, EXCEPT:

The key employee names the beneficiary.