Uses of life

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

A pension deficiency if the key employee dies

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

Business expenses

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

Tax deductible to the employer

Two partners own equal shares in a business worth a total of $1,000,000. If they both commit to the purchase of a life insurance policy that will fund a Buy-Sell Agreement, which of the following is TRUE?

Each partner owns a $500,000 policy on their partner's life

Which statement regarding third-party ownership of a life insurance policy is true?

It is used extensively in estate-planning as well as business circumstances

Which of these factors does not influence an applicants need for life insurance?

Self-maintenance expenses

C is a key employee at ABC Incorporated. If a Key Employee life policy is purchased on her life, which of these statements would be true?

ABC is the policyowner, C is the insured, and ABC is the beneficiary

A Key Employee policy 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 proceeds be directed?

Company X

Which statement regarding a key employee life policy is not true?

The beneficiary is named by the key employee

In life insurance, the needs approach is used mostly to establish:

how much life insurance a client should apply for