Retirement and Other Insurance Concepts
A company buys life insurance on its chief engineer to protect against the financial loss if she dies. Who is the owner, premium payer, and beneficiary?
Answer and explanation
Answer: A. In key person insurance the business applies for, owns, pays for, and is the beneficiary of the policy. The key employee is the insured and must consent to the coverage.Source: Internal Revenue Service — IRS Pub. 535, key person life insurance owned by the business
More retirement and other insurance concepts questions
- How does an entity-purchase buy-sell plan differ from a cross-purchase buy-sell plan in a multi-owner corporation?
- How is a life settlement generally taxed to a seller who is not terminally ill?
- How is annual interest or cash value growth within a permanent life insurance policy taxed while it remains inside the contract?
- If a group life insurance master policy is TERMINATED by the employer, what conversion right do employees covered for at least 5 years possess under TIC § 1131.110?
- If a policy becomes a MEC, how are loans and partial withdrawals taxed under IRC rules?
- If an employee dies during the 31-day group life conversion period BEFORE applying for individual conversion, how is the claim handled under TIC § 1131.109?
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