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
Law requiring the operator of an automobile to show financial ability to pay for automobile-related losses. In many states evidence usually takes the form of a minimum amount of automobile ...
Medical malpractice that is the legal responsibility of a person or organization not in the medical profession or business. It is usually covered under a professional liability insurance ...
Employee benefit insurance plan whose objective is to provide the retired employee with life insurance. This group life insurance product is composed of two basic parts: annually renewable ...
Professional designation conferred by the American College. In addition to professional business experience in insurance planning and related areas, recipients must pass national ...
Legal entity that provides for ownership of property by one person for the benefit of another. The trustee receives title to the property, but does not have the right to benefit personally ...
Provision established either by state statute or court order that permits the defendant to establish that at the time of the injury incurred by the plaintiff, the defendant provided goods ...
Health insurance coverage only for a specified catastrophic disease such as cancer. It is important to ascertain the waiting period required, maximum benefits and maximum length of time ...
Amendments to the water quality improvement act of 1970 that extends liability of shipowners to any hazardous substances discharged by their ships. The 1970 act made shipowners responsible ...
Account in which the same interest rate is credited on all premiums regardless of the time period and amount contributed. ...
Have a question or comment?
We're here to help.