Insurance Ch 8 Flashcards
_______ are arrangements for the sale of the individuals interest in a business due to death or disability.
Buy-sell agreements 
Buy-sell agreements maybe structured under a _______ or a _______, which are both typically funded by life insurance.
Stock redemption (entity purchase) / cross purchase agreement
In a cross purchase buy sell agreement, the surviving owner buys out the deceased owner. _________ needs to be both the owner and the beneficiary of the life insurance policy to keep it out of the deceased owners estate and out of the‘s assets.
Surviving owner
Death benefits from MEC contracts are _______.
Tax free
Buy sell agreements ______ trigger transfer of value exposure.
Can
This type of life insurance is acquired to protect an employer against economic loss from the death of a valued employee.
Key employee life insurance
________ should be the owner and beneficiary of the key employee’s life insurance.
The business
The premiums for key employee insurance are _______ while the death benefits are received ______.
Non-deductible/tax free.
An arrangement under which an employer and an executive share costs and benefits of a life insurance policy.
Split dollar plan
Under this method of the split dollar plan, the employer owns the policy and has responsibility for the premium payment. The employers share of the benefits is secured through its ownership of the policy. A beneficiary is name to receive the employees share of the death proceeds.
The endoRsement method
Under this method of the split dollar plan, the insured employee is the policy owner. The corporation lends the employee, the corporations share of the annual premium, and the loan amounts are secured by the assignment of the policy to the corporation. The corporation receives its benefits as a Saye of the policy at the earlier of the employees, death or the termination of the split dollar plan.
The collateral aSSignment method
These policies cover the ongoing costs of operating a business, while the business owner is totally disabled, actual expenses, but not the owners salary or reimbursed during the time of disability up to a maximum monthly benefit, usually for up to one to two years.
Business over overhead expense insurance
Business overhead expense insurance for sole proprietors:
Premiums are _______ and the proceeds are ______.
Deductible / taxable
Business overhead expense insurance for corporations
The corporation ________ deduct the premiums it pays, but _______ the insurance benefits from its gross income.
A(n) ________ is a periodic payment from an account maintained by a life insurance company, beginning at a specific or contingent date and continuing for a fixed period, or for the duration of a designated life or lives.
Annuity
