Section 11 – Uses Of Life Insurance

Question 1

All of the following are considered appropriate uses of life insurance for business purposes EXCEPT
A. Attracting quality employees by offering a group life plan
B. Funding an entity buy-sell agreement
C. Protecting the business by covering key employees with life insurance
D. Protecting the business by covering entry level employees with life insurance

Answer 1

Protecting the business by covering entry-level employees with life insurance

Question 2

Which of these factors is NOT taken into account when determining an applicant’s life insurance needs?
A. Social Security
B. Automobile
C. Savings
D. Pension

Answer 2

Automobile

Question 3

When calculating the amount of life insurance needed for an income earner, what Hass to be determined when using the NEEDS APPROACH?
A. The income earner’s future projected income
B The family’s financial objectives if the income earner were to die or become disabled
C. The insurance company’s financial rating
D. The income earner’s credit score.

Answer 3

The family’s financial objectives if the income earner were to die or become disabled

Question 4

All of the following are examples of a Business Continuation plan ECEPT
A. Key person insurance
B. Cross-purchase agreement
C. Stock-redemption plan
D. Deferred compensation

Answer 4

Deferred compensation

Question 5

Which approach predicts, a person’s earning potential and determines how much of that amount would be devoted to dependence?
A Future value approach
B. Earnings approach
C. Needs approach
D. Human life value approach

Answer 5

Human life value approach