Uses of Life Insurance

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

An increased pension liability if the key employee dies

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

Business expense

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

Cover the cost of unexpected expenses

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

Cross-Purchase Agreement

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?

Split-Dollar

When using the needs approach for life insurance planning, a lump sum may be created to provide for all of the following EXCEPT

Employee Benefits

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?

Identifies the needs of an individual and the individual's dependents

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

Local unemployment rates

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

Pay for finding and training a replacement if the employee dies prematurely

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

Self-maintenance expenses

The premiums paid by an employer for his employee's group life insurance are usually considered to be

Tax-deductible to the employer

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

Unemployment tax expenses

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

How much life insurance a client should apply for

What is considered a valid reason for small corporations to insure the lives of its major stockholders?

Fund a buy-sell agreement