Retirement and Other Insurance Concepts
In a key person life insurance arrangement, who ordinarily owns the policy and receives the proceeds?
Answer and explanation
Answer: B. Key person coverage protects the business against the loss of an individual whose death would cost it money, so the business applies, owns the policy, pays the premium, and is the beneficiary. Family protection is personal coverage, and a trustee-owned arrangement with the remaining owners as beneficiaries describes a buy-sell structure.Source: Pearson VUE — Georgia Insurance Examination Content Outlines #121102 — Outline page S2, Key person insurance
More retirement and other insurance concepts questions
- If a policy becomes a MEC, how are loans and partial withdrawals taxed under IRC rules?
- If an employer provides an employee with $150,000 of group term life insurance coverage, how is the coverage above $50,000 taxed to the employee?
- In a business partnership with 3 partners, how many separate life insurance policies are required to fund a cross-purchase buy-sell agreement?
- In a corporate key-person life insurance arrangement, who is the policyowner, premium payor, and beneficiary?
- Two clients need the same monthly survivor income. Why does the capital retention approach require a larger death benefit than capital liquidation?
- Under a third-party owned policy, who may take a policy loan against the accumulated cash value?
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