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?