Oh Boy Flashcards
Following are personal uses of life ins except
Survivor protection
Estate creation
Cash accumulation
Buy sell agreement
Buy sell agreement
Life ins proceeds may be used to pay inheritance taxes and federal estate taxes so that it is not necessary to
Sell off assets
All biz uses of life ins except
Funding against company’s general financial loss
Compensating executives
Funding against financial loss caused by death of key employee
Funding business continuation agreements
Funding against company’s general financial loss
Corporation is owner and beneficiary of key person life policy …if corporation collects policy benefit then
Benefit is recd as taxable income
Benefit is recd tax free
Benefit is subject to exlusionary rule
Irs has no jurisdicition
Benefit is recd tax free
Treated as reimbursement
Purpose of key person insurance
Lessons risk of financial loss
Provide health ins to families of key emps
Insure retirement mr benefits are available to all key employees
Lessen the risk of financial loss because the death of a key employee
Key person may be used as term or permanent life with
Whole life and universal life being used most often
Not considered example of biz use of life ins
Workers comp
Buy sell funding
Exec bonuses
Key person
Workers compensation
Payable benefit when worker injured regardless of fault or negligence
Eh person ins policy can pay for
Loss of personal income
Workers comp
Hospital bills of key Emp
Costs of training replacement
Costs of training a replacement
All true of key person ins except
Emp is owner Payor and beneficiary of policy
Key Emp is insured
Plan is funded by perm ins only
No limitation on number of key Emp plans in force at any one time
Plan is funded by permanent ins only
May be funded by ANY type of ins
Corporation is owner beneficiary applicant premium payer of key person life policy. If corporation collects policy benefit then
Benefit is recd as taxable
Benefit is recd tax free
Benefit is subject to exclusionary rule
Irs has no jurisdiction
Tax free
Which of following concerning taxation of premiums in key person life ins policy
Premiums are tax deductible as business expense
Taxable to employee
Not tax deductible as business expense
Premiums are not tax deductible as business expense
Policy used to fund agreement that contractually establishes intent of someone to purchase biz upon insured biz owners death is
Buy sell agreement
Key person policy
Split dollar plan
Stock redemption plan
Buy sell agreement
All true except
Employer is owner Payor and beneficiary
Key employee is insured
Plan is funded by permanent ins
No limitation on number of key employee plans at one time
Plan is funded by permanent ins only
