Partnership Life And Health Insurance
Protection to maintain the value of a business in case of death or disability of a partner. Upon the death or long-term disability of a partner, insurance can provide for the transfer of a deceased or disabled partner's interest to the surviving partner according to a predetermined formula. Funding can be achieved through either of two plans:
- Cross Purchase Plan each partner buys insurance on the lives of the other partners. The beneficiaries are the surviving partners who use the proceeds to buy out the deceased's interest. This plan can become complicated when there are more than two partners. For example, if there are four partners, partner A will buy insurance on the lives of partners B, C, and D. The procedure would be repeated with partners B, C, and D. Total policies would be 12.
- Entity Plan because of the number of policies required, the entity plan is most often used for buy-and-sell agreements by larger partnerships. The partnership owns, is beneficiary of, and pays the premiums on the life insurance of each partner. When one of the partners dies, the partnership as a whole purchases the deceased partner's interest. Premiums are not tax deductible as a business expense. If whole life insurance is used, the cash values are listed as assets on the balance sheet of the partnership and are available as collateral for loans.
Popular Insurance Terms
Amount designated as a future liability for life or health insurance to meet the difference between future benefits and future premiums, net level premium is determined so that this basic ...
Concealment of the actual fact. For example, an insurance agent tells a prospective insured that a policy provides a particular benefit when in actual fact this benefit is not in the ...
Coverage on an all risks basis for goods in transit, bailment, and while on the premises of others. ...
Law, in several states, establishing a fund to guarantee benefits under policies issued by insurance companies that become insolvent. ...
Same as term Arbitration Clause: rovision in a property insurance policy to the effect that in the event the insured and insurer cannot agree on the amount of a claim settlement, each ...
Coverage in excess of that provided by a basic hospital medical insurance plan. After the limits of coverage have been exhausted under a basic plan, major medical then covers medical ...
Worst case scenario under which an estimate is made of the maximum dollar amount that can be lost if a catastrophe occurs such as a hurricane or firestorm. ...
Supplementary life insurance reserve required by state regulators when the gross premium is lower than the valuation premium. Some life insurers are able to charge policyholders a premium ...
Method of comparing the costs of a set of cash value life insurance policies that takes into account the time value of money. The true costs of alternative cash value policies with the same ...
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