Retirement and Other Insurance Concepts
A business owner buys a key-person life policy on a vital executive. Three years later, the executive resigns. If the executive dies 5 years after resigning while the business maintains the policy, who receives the death benefit?
Answer and explanation
Answer: B. Because insurable interest is required only at inception, subsequent termination of the business relationship does not invalidate the policy.Source: Texas Insurance Code Chapter 1103 — § 1103.054, Inception Rule
More retirement and other insurance concepts questions
- Which fact most clearly separates a life settlement from a viatical settlement?
- Which of these is a cash need rather than a continuing income need in a personal needs analysis?
- Who makes contributions to a Simplified Employee Pension (SEP) IRA plan, and how are they taxed?
- Why are corporate premiums paid for key-person life insurance non-deductible as business expenses for income tax purposes?
- Why do insurers generally require a higher participation percentage in a contributory group life plan than in a noncontributory plan?
- A client wants survivors to receive income for thirty years and does not mind if the fund is exhausted at the end. Which approach fits?
590 Texas questions like this one.
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