#6 Retirement T

When an employer offers to give an employee a wage increase in the amount of the premium on new life insurance policy, this is called a(n)

Executive bonus

In the Executive Bonus plan, who is the owner of the policy, and who pays the premium?

Executive is the owner, and the executive pays the premium

Two attorneys operate their practice as a partnership. They want to start a program through their practice that will provide retirement benefits for themselves and three employees. They would likely choose

HR-10 (Keogh Plan)

Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy?

Premiums are not tax deductible as a business expense.

A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then

The benefit is received tax free

A partnership buy-sell agreement in which each partner purchases insurance on the life of each other is called a?

cross purchase plan each partner is owner, payer and beneficiary

Which of the following is INCORRECT concerning a noncontributory group plan?

The employees receive individual policies

Who is the owner and who is the beneficiary on a Key Person Life Insurance Policy?

The employer is the owner and beneficiary. With the key-person coverage, the business (the employer) is the applicant, owner, premium payer, and beneficiary.

All of the following are true of key person insurance except

The plan is funded by permanent insurance only.

All of the following statements concerning the use of life insurance as an executive bonus are correct except

The policy is owned by the company

Which of the following best defines the "owner" as it pertains to life settlement contracts?

The policyowner of the life insurance policy

What is the purpose of key person insurance?

To lessen the risk of financial loss caused by the death of a key employee

All of the following are examples of a third-party ownership of a life insurance policy EXCEPT

An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan.

A key person insurance policy can pay for which of the following?

Costs of training a replacement. (A key person insurance policy will pay for costs of running the business and replacing the employee.)

Which of the following is true regarding taxation of dividends in participating policies?

Dividends are not taxable.