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
The definition of special acceptance explains how two insurance institutions work together for the benefit of the masses. In order to define what special acceptance means, we must ...
Insurance against interruption of supply of goods and services. If firm A depends on firm B for its supply of goods and services, an interruption caused by damage or destruction to B can ...
Unfunded trust that acts as the owner of a life insurance policy. The trust receives a donor's cash payments on a periodic basis, from which the beneficiary of the trust has a specified ...
Professional designation earned after the successful completion of six national examinations given by the insurance institute of America (IIA). Covers such areas of expertise as ocean ...
Amount of reinsurance accepted by a second reinsurer which is in excess of the original insurer's retention limit and the first reinsurer's first surplus treaty's limit. ...
Inquiry conducted by a committee of the legislature of the State of New York in 1905 that looked at abuses of life insurance companies operating in the state. This study led to stricter ...
Cost per unit of insurance. ...
Clause in a reinsurance policy that excludes the reinsurer's liability for losses occurring after a stipulated date. ...
Policy with a face value that varies according to a prescribed index of prices; otherwise benefits provided are similar to ordinary whole life. The death benefit is based on the particular ...
Have a question or comment?
We're here to help.