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
Organization of local life underwriter associations representing life and health insurance agents on practices of selling and servicing life and health insurance products. NALU sponsors ...
Inland marine policy that protects an insured against loss for property that is shipped. One policy may be written for a single shipment, as for a family moving household goods, or it may ...
Amount subtracted from an annuity or from mutual fund proceeds payable to an annuity owner or mutual fund owner to reflect expense fees described in the annuity contract or mutual fund ...
Statutory liabilities minus the interest MAINTENANCE RESERVE minus the ASSET VALUATION RESERVE. ...
Coverage under a commercial workers compensation policy for situations in which an employee not covered under workers compensation laws could sue for injuries suffered under common law ...
High severity loss that does not lend itself to accurate prediction and thus should be transferred by the individual or business to an insurance company. ...
Insurance facility composed of many different syndicates, each specializing in a particular risk; for example, hull risks. Lloyd's provides coverage for primary jumbo risks as well as ...
Statute that makes it illegal in most states for an agent to rebate (return) any portion of his commission as an inducement for an applicant to purchase insurance from him. ...
Plan in which a public employer (such as a university, state, county, or municipality) sponsors a retirement savings program, named for the section of the Internal Revenue Code that permits ...
Have a question or comment?
We're here to help.