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
Insurance company that actually underwrites and issues the insurance policy. The term is used because the insurance company assumes or carries the risk for policyowners. The agent usually ...
Mortality table that reflects irregularities from age to age due to chance fluctuations in the sequence of the rates of mortality. The rates of death as reflected by the mortality table in ...
What is SSDI? It is a form of financial aid for people living with a disability that impacts their quality of life. As one of the largest Federal programs designed to provide assistance to ...
Option under a participating life insurance policy in which dividends are left on deposit with the company to accumulate at a specified interest rate. If this option is chosen, it is ...
Financial analysis method established by the national association of insurance commissioners (naic) to detect problems of property and casualty insurance companies and life and health ...
Federal agency that regulates commerce across state lines. The ICC does not oversee insurance, which is subject to regulation by the states according to Public Law 15, McCarran-Ferguson ...
Liability coverage for dockworkers for damage to property in transit while in their care. ...
Annual meetings of insurance practitioners and academicians from throughout the world interested in exchanging ideas concerning the theory and applications of insurance. The meeting is held ...
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 ...
Have a question or comment?
We're here to help.