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
Same as term Graduated Life Table: 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 ...
Forgery insurance covering securities issues such as stocks and bonds. They protect the issuer of securities against forgery of the securities. ...
Coverage that goes into effect when an individual's claim reaches a specific threshold selected by the employer who has self-insurance. After this threshold is reached, the policy pays ...
Policy provision designed to restore an insured to his or her original financial position after a loss. The insured should neither profit nor be put at a monetary disadvantage by incurring ...
Maximum sum of money that the insurance company will pay, during the time interval that the product liability insurance coverage is in effect, for all product liability-related claims ...
Mechanism for providing coverage when the insured's underinsured motorist coverage limit is more than the tort feasor's limit of liability that has been previously reduced by claim payments ...
Addition to reserves of a life insurance company required by various states because the valuation premium is greater than the GROSS PREMIUM. Without a deficiency reserve, the normal reserve ...
Person for whom the trust was created and who receives the benefits thereof. In many instances a trust is established to prevent the careless exhaustion of an estate. For example, the ...
Coverage in the event of threats to injure an insured or damage or destroy his property. ...
Have a question or comment?
We're here to help.