chapter 10 uses of life insurance quiz

Question 1

two partners own equal shares in a business worth a total of 1M 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?

Answer 1

each partner owns a $500,000 policy on their partners life

Question 2

C is a key employee at ABC incorporated. if key employee life policy is purchased on her life, which of these statements would be true?

Answer 2

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

Question 3

when an individual is planning to protect his family with life insurance, one mthod of doing so is called needs analysis. what exactly does needs analysis involve?

Answer 3

establishes the needs of the individual and his dependents

Question 4

what is considered a valid reason for small business to insure the lives of its major shareholders?

Answer 4

fund a buy sell agreement
int he event of death of a major shareholder in a business

Question 5

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

Answer 5

local unemployment rate