Lesson 10 Review
Most life insurance policies are purchased through life insurance agents.
Under the Human Life Value Approach, the life value is calculated on net future earnings potential and may be determined by discounting a person's future net earnings at a reasonable rate of interest. The Human Life Value Approach has been largely replaced by the more practical Needs Approach. The Needs Approach considers families' needs if either spouse should die or become disabled.
Universal life, variable life, and adjustable life are permanent forms of contracts and can be used effectively as a basis for producing retirement assistance income. Term life, on the other hand, should not be relied upon as a retirement tool.
Small businesses are usually operated as sole proprietorships, which have only one owner. Partnerships usually have two or more owners who contribute and share profits. Corporations can be publicly held or closely held.
Life insurance is used in business as (1) a funding medium, (2) a form of business interruption insurance, and (3) as an employee benefit.
Buy-sell agreements can be drafted only by an attorney. Generally, there are four ways to fund a buy-sell agreement: (1) using cash on hand, (2) borrowing the funds, (3) making installment payments, or (4) funding through life insurance proceeds.
Disability buy-outs are normally entity purchases, not cross-purchases.
Key person insurance premium payments are not tax deductible - Death benefits are not taxable.
A salary continuation plan is set up between the employer and employees and is funded by the employer.
Split dollar plans were utilized to encourage young employees to join a company and for established executives to stay.
Deferred compensation plans are nonqualified plans that are comprised of a contractual agreement to pay benefits in the future.
The information contained in Unit 14 of the Florida study manual has been presented in Lesson 10 of the online course.
