LLQP (Life Licence Qualification Program) Practice Exam · Question
What is the primary motivation for a corporation to purchase 'Key Person' life insurance?
Key person insurance is intended to compensate the business for the financial loss (lost revenue, recruitment costs) resulting from the death of a vital employe
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Question: What is the primary motivation for a corporation to purchase 'Key Person' life insurance?
Answer options:
- To provide a retirement fund for the employee.
- To provide a death benefit to the employee's family.
- To replace the employee's income if they become disabled. ✅ To compensate the business for the loss of a vital employee's contribution.
Correct answer: To compensate the business for the loss of a vital employee's contribution.
Explanation: Key person insurance is intended to compensate the business for the financial loss (lost revenue, recruitment costs) resulting from the death of a vital employee. The business is usually the owner, payer, and beneficiary.
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- A life insurance policy that offers lifelong coverage, a guaranteed death benefit, and a savings component tha
- Group benefits in Canada commonly include:
- Sarah, a 35-year-old marketing professional in Ontario, purchases a participating whole life insurance policy
- Mark, a 45-year-old business owner in British Columbia, has a Universal Life policy with a Level Cost of Insur
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