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
Coverage to pay basic expenses for an insured and his or her family in states with no fault automobile insurance. No-fault laws generally require drivers to carry both liability insurance ...
Legislation providing that, to the extent that all deductible medical care expenses exceed 7.5% of the taxpayer's adjusted gross income (AGI), expenses not reimbursed under qualified ...
One that provides group health or pension benefits for a multiemployer plan. To lower the cost, small firms band together to take advantage of the economies of large group underwriting. ...
Same as term Contingent Business Income Coverage Form: coverage for loss in the net earnings of a business if a supplier business, subcontractor, key customer, or manufacturer doing ...
In property insurance, percentages of basic coverages which may be applied to provide coverage for other real and personal property. For example, under the homeowners INSURANCE POLICY ...
Policy permitting an insured to choose desired coverages. These policies are important for items with relatively low limits of coverage under standard property insurance forms. For example, ...
Partial payment of medical service expenses required in group health insurance, in addition to the membership fee. For example, for each visit of a physician a member may be required to pay ...
number of people born as a percentage of the total population in any given period of time. ...
Buying a home or investing in a commercial property in the United States implies complex legal clauses. Perhaps one of the most perplexing ones is the noncontribution mortgage clause. If ...
Have a question or comment?
We're here to help.