XCEL USES OF LIFE INSURANCE FINAL PAPER QUESTIONS AND ACCURATE ANSWERS COMPLETE PREPARATION KIT

XCEL USES OF LIFE INSURANCE FINAL
PAPER QUESTIONS AND ACCURATE
ANSWERS COMPLETE PREPARATION KIT

●● Buy-sell agreements
Answer: Buy-Sell agreements (aka business continuation agreements)
are used to assure the ownership of the business is properly transferred
upon the death or disability of an owner or partner. Third-party
ownership of life insurance policies is widely used in business insurance
and estate- planning situations.


●● Buy-sell funding for sole proprietors
Answer: There is a two-step business continuation plan to keep the
business running after the proprietor's death, whereby the employee
takes over management of the business:
1. Buy-Sell Plan: an attorney drafts a buy-sell plan stating the
employee's agreement to purchase the proprietor's estate & sell the
business at a price that has been agreed-upon beforehand.
2. Insurance Policy: the employee purchases a life insurance policy on
the life of the proprietor. The employee is the policyowner, beneficiary,
and pays the premiums. Upon the proprietor's death, the funds from the
policy are used to buy the business.


●● Buy-sell funding for partnerships