CH 12 Uses of Life Insurance
What two-step business continuation plan is included in a two-step business continuation plan?
Buy-Sell Plan and Insurance Policy
What is generally treated as a deductible business expense?
Corporate-owned life insurance
What are two types of buy-sell agreements for partnerships?
Cross-purchase plans
What method calculates the amount of money a person is expected to earn over his lifetime to determine the face amount of life insurance needed?
The Human Life Value Approach
What is the most useful in determining how much life insurance a client should apply for?
The Needs Approach
What is widely used in business insurance and estate planning situations?
Third-party ownership of a life insurance policy
What type of plan does each partner purchase, pay the premiums for and is the beneficiary of a life insurance policy on each of the other partners?
a cross-purchase plan
What is an executive bonus plan?
a non-qualified employee benefit arrangement
What does the employer establish in a Salary Continuation Plan?
an agreement
What is the split-Dollar plan?
an arrangement where an employer and an employee share in the cost of purchasing a life insurance policy on the employee
Who will continue to receive income payments upon death, disability, or retirement?
an employee
What type of benefit can an employer use to pay a highly paid employee at a later date?
an executive benefit
What is a non-qualified employee benefit arrangement?
an executive bonus plan
What are Buy-Sell agreements also known as?
business continuation agreements
What type of business expense is corporate-owned life insurance generally treated as?
deductible
What is an entity plan called?
stock redemption plan
What is the Human Life Value Approach calculated to determine?
the face amount of life insurance needed
What is the purpose of key person insurance?
to prevent the financial loss that may ensue when an owner, officer, or manager dies
How many steps is a business continuation plan?
two