Chapter 6

Question 1

Group life insurance

Answer 1

Group of people under single contract

Cost is determined by the average age of the group, size of the group, industrial classification, experience rating based in groups past claims

Question 2

Contributory

Answer 2

Employees must contribute to the premium payments and at least 75% of all eligible employees must participate

Question 3

Noncontributory

Answer 3

Employer pays the entire premium with a mandatory 100% of the eligible employees participate

Question 4

Buy- Sell Agreement

Answer 4

Establish a price with the intent to purchase at a predetermined value

Question 5

Cross-Purchase Plan

Answer 5

Used when partners of a business purchase life insurance on each other. At the death of one partner, policy proceeds are used to purchase that persons interest in the business from his heirs

Question 6

Entity plan

Answer 6

Business entity enters into an agreement in which it is obligated to purchase the deceased owners interest

Question 7

Funding (social Security System)

Answer 7

Provided by both employee and employer through the FICA withholding. The employer