It needs IRS approval C. Contributions are not currently tax deductible D. It can discriminate in benefits and selecting participants, All of the following are general requirements of a qualified plan EXCEPT A. Chapter 4-Primerica Flashcards | Quizlet 403(b) plan C. Simplified Employee Pension Plan D. 401(k) plan, Group life insurance is a single policy written to provide coverage to members of a group. It classifies as either liability insurance or property insurance, where the property can be a vehicle, real estate, etc. This plan would be funded with before-tax corporate dollars, and it does not meet government approval standards. In general, after an accident by the insured, the insurance company must pay for the damages. To receive dividends over a certain period C. Life insurance distribution D. Retirement, Which of the following statements about group life is correct? General Insurance- Life Basics Chap.2 Quiz 2 AD Banker She has been an investor, entrepreneur, and advisor for more than 25 years. An incidental beneficiary is a person whom contracting parties did not intend to benefit when they contracted but happens to get benefits. A third party is an individual or entity that is involved in a transaction but is not one of the principals and, thus, has a lesser interest in the transaction. Investopedia does not include all offers available in the marketplace. If you caused the damage, the other person files the FIR, and vice versa, Contact the insurer, notify them of the damages, and give them all the necessary details. a policyowner who is not the insured, Accounting Cycle and Classifying Accounts, Adjusting Accounts for Financial Statements, Asset Demand and Supply under Uncertainty, Business Analytics & Technology Management Chapter 2, Business Analytics & Technology Management Chapter 3, Business Analytics & Technology Management Chapter 4, Business Analytics & Technology Management Chapter 5, Business Analytics & Technology Management Chapter 6, Capital Budgeting and Managerial Decisions, Derivative Instruments and Hedging Activities, External Financial Statements and Revenue Recognition, Financial Intermediaries and Financial Markets, Financial Markets and Securities Offerings, Financial Statements and Accounting Transactions, Integrated Marketing Communications and Direct Marketing, Interactive Marketing and Electronic Commerce, Interpersonal and Organizational Communication, Introduction to Human Resource Management, Introduction to Human Resources Assessment, Managerial Accounting Concepts and Principles, Market Segmentation Targeting and Positioning, Organization and Operation of Corporations, Organizational Markets and Buyer Behaviour, Profitability Analysis and Analytical Issues, Profitability Analysis and Decentralization, Reporting and Analyzing Long Lived Assets, Responsibility Accounting and Performance Measures, Understanding Interest Rates Determinants, All of the following are reasons to buy term insurance except. WebCreated by rileytsharp Terms in this set (4) With respect to third-party ownership of life insurance in the personal insurance market, all the following statements are true EXCEPT: Answer: The primary drawback of this insurance is that it does not provide compensation for the insureds automobile. Premiums paid by an employer on a $30,000 group term life insurance plan for employees B. Death benefits B. Third-party rights are more enforceable if the benefit was intentional and the third party was aware of it. In the case of a real estate transaction, an escrow company works to protect all parties in the transaction. A. It can even have compensation in case of their death. The earnings in the plan accumulate tax deferred B. Each member covered receives a policy C. Coverage cannot be converted when an individual leaves the group D. Premiums are determined by age, occupation, and individual underwriting, A. Marriage vs. Common-Law Marriage: What's the Difference? The group sponsor receives a Certificate of Insurance B. 10 B. A minimum number of participants is required in order to underwrite the plan C. The cost of the plan is determined by the average age of the group D. There is a requirement to prove insurability on the part of the participants, D. There is a requirement to prove insurability on the part of the participants, For an individual who is not covered by an employer-sponsored plan, traditional IRA contributions are A. Deducted based on the income level B. The privity of the contract is between the contracting parties - the promisor and promisee. Start Your Free Investment Banking Course, Download Corporate Valuation, Investment Banking, Accounting, CFA Calculator & others. Proof of funds (POF) refers to a document that demonstrates a person or entity has the ability and funds available for a specific transaction. The escrow officer follows the directions of the lender, the buyer, and the seller in an efficient manner when handling the funds and documentation involved in the sale. 403(b) Plan (TSA) B. Keogh Plan C. Roth IRA D. SEP, To attain currently insured status under Social Security, a worker must have earned at least how many credits during the last 13 quarters? The most common application is in the field of motor racing. Most examples are less clear-cut. A third party may also refer to an entity that a company uses to mitigate risk. A. A. You are the first party and If an accident occurs and the insured is at fault, the insurance company will pay for all material damages to the property or vehicle. A policyowner who is not the insured In a life settlement contract, whom does the life settlement represent? Third-Party Policy ownership Flashcards | Quizlet Funding business continuation agreements B. What is a characteristic of adjustable life. Education funds B. He previously held senior editorial roles at Investopedia and Kapitall Wire and holds a MA in Economics from The New School for Social Research and Doctor of Philosophy in English literature from NYU. WebThird-party ownership exists when the insured and the owner of the policy are different persons. Small firms save time and money by leveraging scalable infrastructure with variable costs for trade operations, data storage, disaster recovery, and system integration and maintenance. By clicking Accept All Cookies, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. It provides coverage for the damage the insured individual/business causes to another persons property, The most common insurance is for vehicles like cars, motors, etc. They are tax free to terminally ill insured, What is the purpose of key person insurance? His agency then pays the car owner(third party) for the damages. Although, if the request is invalid due to drunk driving, intentional cause, or absence of the necessary document, then the company can reject to pay the compensation. The offers that appear in this table are from partnerships from which Investopedia receives compensation. To insure retirement benefits are available to all key employees B. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Nonetheless, it does not cover damage to the insured vehicle. D. Executive is the owner, and the executive pays the premium. Long-Term Care Insurance Flashcards | Quizlet For example, say a parent signed a lease and made a security deposit on a rental apartment for a child to live in while attending college. Dividend interest is not taxable B. For example, the insured gets into an accident that damages Person As bike and Person Bs fence and injures Person A and the insured. WebStudy with Quizlet and memorize flashcards containing terms like Property and casualty the basics, A property policy, Casualty/liability policy and more. The employees receive individual policies C. They help to reduce adverse selection against the insurer D. They require 100% employee participation, B. If the person is an intended third-party beneficiary and their rights of the contract are vested, then they have the same rights as the parties of the contract. The employer pays 100% of premiums B. In some Once rights are vested, the contract cannot be changed or modified unless the third-party consent. WebWho is a third-party owner? In addition, $25,000 for medical and the driver. Have attained fully insured status C. Be disabled for 1 year D. Have permanent kidney failure. Web(The designation third party means a party other than you or the insurer. Sickness in old age B. A. It is coverage that a driver can buy to protect themselves in the event of a collision with an uninsured driver. The company deposits the 25% C. 75% D. 100%, If a life insurance policy develops cash value faster than a seven-pay whole life contract, it is A. title insurance Flashcards | Quizlet Clearing is when an organization acts as an intermediary to reconcile orders between transacting parties. The key employee is the owner and beneficiary C. The key employee is the owner and the employer is the beneficiary D. The employer is the owner and beneficiary, D. The employer is the owner and beneficiary, When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a(n) A. In some cases, it also covers damage to property, such as fences or buildings. The very first step is to lodge an FIR with the police. Individuals covered under the policy receive a certificate of insurance B. One might need to provide proof if they were not at fault, Afterward, the case goes to the court, where the judge decides if the claim is valid. How to Use Life Insurance to Buy a House: The Key Steps. In law, a third-party beneficiary may have certain rights that can be enforced if the contract is not fulfilled. Understanding Life Insurance Policy Ownership By outsourcing middle- and back-office solutions, small firms take advantage of technology and processes for more efficient task completion, maximum operating efficiency, reduced operational risks, decreased reliance on manual processes, and minimal errors. Definition, Meaning, Types, and Examples. $8,000, 60 days C. $8,000, 30 days D. $10,000, 60 days, Which of the following is INCORRECT concerning a noncontributory group plan? The premiums paid into the policy added up to $15,000. A. This is whats known asthird-party life insurance. The insured may choose to convert to term or permanent individual coverage, Which of the following is the best reason to purchase life insurance rather than annuities? Webclint_william_lemon Terms in this set (10) Third-party ownership A life insurance policy, when the insured and policy owner are not the same person -the insured has no rights under the policy -most common for business purposes to insurer the life of a valuable employee. Subject to income taxation by the Federal Govn't B. Who is a third-party owner? Accounting MCQs | Accounting MCQs The privity of the contract is The beneficiary may have a right to compensation if the contract is not fulfilled. It also covers any legal fees for lawsuits against the insured. C. Premiums are determined by the age, sex and occupation of each individual certificate holder, An employee is insured under her employer's group life plan. To liquidate a sum of money over a period of years B. A. It is an optional policy, where the policyholder may choose from various coverage plans. Key person policy B. Split-dollar plan C. Stock redemption plan D. Buy-sell agreement, What type of life insurance is most commonly used for group plans? The beneficiary may get named in a contract to have contractual rights, but it is not necessary for them to be identifiable at the time the contract is formed. There is a 10% penalty for early distribution of the death benefit B. He previously held senior editorial roles at Investopedia and Kapitall Wire and holds a MA in Economics from The New School for Social Research and Doctor of Philosophy in English literature from NYU. When you visit the site, Dotdash Meredith and its partners may store or retrieve information on your browser, mostly in the form of cookies. Adding insult to injury, the apartment has been rented to someone else. Chapter 4: Taxes, Retirement, and other Insurance concepts. 4 credits B. I hope you got the correct answer to 4 B. ALL RIGHTS RESERVED. If the beneficiary is a donee beneficiary, they cannot ask for delivery of a promised gift, but only for recovery under equitable principles of justice. D. Those who have been insured under the plan for at least 5 years, Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy? Taxable to the extent that they exceed 7.5% of the beneficiaries adjusted gross income C. Taxed as capital gain D. Taxed as ordinary income, A life insurance policy used to fund an agreement that contractually establishes the intent of someone to purchase a business upon the insured business owner's death is a A. Employer contributions are not included in the employee's gross income B. SEPs are suitable for large companies C. SEPs allow the employer to make annual tax deductible contributions up to 25% of an employee's earned income. It can also be useful when an individual rents their property to a third party. 10 C. 30 D. 40, Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history or mortality factors? In this policy, the first party is the insured, the second party is the insurer, and the third party is any other person. THE CERTIFICATION NAMES ARE THE TRADEMARKS OF THEIR RESPECTIVE OWNERS. Say the owner of a new office building signs a contract with a big company to lease four floors of space. Defined contribution plan B. An irrevocable beneficiary C. A buy-sell agreement D. A family term rider, In order to qualify for conversion from a group life policy that has been terminated to an individual policy of the same coverage, a person must have been insured under the group plan for how many years? For instance, a mother purchased medical insurance for her son from an insurance company; the mother is the promisee, the son is the third-party beneficiary and the company is the promisor. The insurance producer C. The policyholder to keep on file D. Each insured person, When a beneficiary receives payments consisting of both principal and interest portions, which parts are taxable as income? Executive bonus B. [Last updated in June of 2022 by the Wex Definitions Team], A third-party beneficiary is a person who is not a contracting party of a, If a person is not the original party to a contract, they usually cannot enforce the contract or assert a claim of a. The Restatement of Contract 133 divides intended beneficiariesinto two categories: The contractual rights cannot be enforced by the third-party beneficiary until the rights are vested. A. A clearing bank approves checks for payments. The contractual rights cannot be enforced by the third-party beneficiary until the rights are, Manifests assent to a promise in the manner requested by the contract or contracting parties, or, Prior to vesting, contracting parties can, Even though there is no contract privity among the third-party beneficiary and contracting parties, the third-party beneficiary may still have the right to sue them to enforce the contract or seek, Generally, the beneficiary can only sue the promisor to enforce the duty created by the promise in the contract. Article by Madhuri Thakur Updated July 7, 2023 Third-Party Insurance Meaning Third-party insurance covers injury to an individual other than the insured, including Which of the following statements best describes what will happen? violating a term or condition of a plan of insurance. A spousehas a financial stake in the continued life of the familys income provider. The significant difference between third-party and comprehensive insurance is that comprehensive policy offers additional coverage, such as damages due to disasters, compensation for insured individuals, etc. Investopedia does not include all offers available in the marketplace. Chapter 2 - Third Party Liability Flashcards | Quizlet Which of these applies to a standard risk classification? would have to be met and insurance proceeds could be used for this purpose. Taxable contributions C. Tax-deductible contributions D. Tax-free earnings. Dividends are taxable only after a certain amount is accumulated annually C. Dividends are taxable in some life insurance policies and nontaxable in others D. Dividends are considered income for tax purposes, An individual has been diagnosed with Alzheimer's Disease. a policyowner who is not the insured. A. Meanwhile, even if the promise is not made to them directly, they may still enforce the contract. A. Qualified Pension Plan C. Old Age Survivors Disability Insurance D. Social Insurance Program. A. It is taxable only if it exceeds the amounts paid for premiums by 50% C. It is automatically taxable D. It is only taxable if the cash value exceeds the amount paid for premiums. Certificate of Authority C. Master contract D. Certificate of Insurance, An insured under a life insurance policy has been diagnosed with a terminal illness and has 6 months to live. C. Old Age Survivors Disability Insurance. Life insurance is typically taken out as a means of ensuring your beneficiarys financial stability in the event of your death. If the corporation collects the policy benefit, then A. Permanently Insured C. Fully Insured D. Partially Insured, Which of the following is NOT true regarding a nonqualified retirement plan? Party A. To learn more, visit the following links. The contracting parties can modify or rescind the contract via a subsequent contract if the contract didnt vest, as they retain the right to change their duty. 4 credits B. The beneficiary cannot sue the promisee unless they detrimentally rely on the promise. Correctly Insured B. A. Web1 / 47 Flashcards Created by cooopss_ Terms in this set (47) Who is a third-party owner? The insured knows that his financial state will worsen even more with the upcoming medical expenses. Third Party Liability WebAnswer: D. A policyowner who is not the insured The above question Who is a third-party owner?, Was part of Insurance MCQs & Answers. Which of the following is true regarding taxation of the accelerated benefits? In such cases, a third-party beneficiary clause is added that identifies an individual or company that expects to benefit from the agreement. A third-party beneficiary receives a benefit from a contract made between two other parties. Which of the following statements concerning group life is CORRECT? A. Third-party ownership B. A. A. A. It is a liability insurance covering damages the insured may cause to a third party. This type of insurance is usually a requirement by law, and its common in many countries. A. A. Moreover, families often purchase it for their cars, vans, trucks, etc. The third party is any other person apart from the insured and the insurer. Settlement option C. Nontaxable exchange D. Nonforfeiture option, When an employer offers to give an employee a wage increase in the amount of the premium on a new life insurance policy, this is called a(n) A. 2003-2023 Chegg Inc. All rights reserved. Surrender C. Dividend D. Premium return, A key person insurance policy can pay for which of the following? A Quick Guide to Helping Your Adult Child Buy a Home, What Is a Fiduciary Duty? Costs of training a replacement B. Chapter 4: Taxes, Retirement, and other Insurance concepts. - Chegg A real estate escrow company acts as a third party to hold deeds, documents, and funds involved in completing real estate transactions. Premiums paid by an individual on his/her own life insurance C. Premiums paid by a mother on her son's policy D. Premiums paid by an employer on the life of a key person, A. To maintain an account that insures the owner of a company remains solvent C. To lessen the risk of financial loss because of the death of a key employee D. To provide health insurance to the families of key employees, C. To lessen the risk of financial loss because of the death of a key employee, Which of the following insurance arrangements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policy owner? The rights of the third-party beneficiary are strengthened if the contract includes a third-party beneficiary clause. Often an insureds beneficiaries are his or her spouse and other family members who have come to depend on the insureds income and whose standard of living would be suddenly curtailed in the event of a sudden death. What is this called? The premium for individual coverage will be based upon the insured's attained age B. It protects people who are not at fault in an accident. A. The participants receive a Certificate of Insurance as their proof of insurance B. The company will then pay for the fence and bike repair. Making a 'willfully false statement'. 1st 2nd and 3rd party vocabulary Flashcards | Quizlet They would likely choose A. Be at least 50 B. So, he requests an insurance claim. The employer is the owner, payor and beneficiary of the policy C. The key employee is the insured D. The plan is funded by permanent insurance only, D. The plan is funded by permanent insurance only, Which of the following is an eligibility requirement for all Social Security Disability Income benefits? A. $3,000 B. 3 Different Types of Life Insurance and Why Theyre Important, 3 Tips for Choosing the Right Business Liability Insurance Policy, Why Home and Auto Insurance Rates are Continuing to Rise in 2023. The clearest example of a third-party beneficiary is found in life insurance contracts. In the Executive Bonus Plan, who is the owner of the policy, and who pays the premium? What Is a Third Party? How Their Role Works and Examples A. In real estate transactions, trust deeds transfer the legal title of a property to a third party until the borrower repays their debt to the lender. Illegal C. A nonqualified annuity plan D. An executive annuity plan, Which of the following terms is used to name the nontaxed return of unused premiums? In the case of a deceased owner or partner, proceeds can be used to buy out the deceased persons financial interests rather than having those interests go to the deceased individuals family, which could cause business operations to slow down or stop altogether. For example, the officer pays authorized bills and responds to the principals authorized requests. Disability B. A husband also has insurable interest in his wife, even if she is a stay at home mom and doesnt earn an income outside of the home. This article explains everything about Third-Party insurance. Employer C. IRS D. Employees, An IRA purchased by a small employer to cover employees is known as a A. If a person is not the original party to a contract, they usually cannot enforce the contract or assert a claim of a breach of contract against any party; however, there is an exception. A. The insurer will pay a reduced death benefit to the beneficiary B. As a result, if a driver causes an accident that damages other cars or the health of those in them, they will be fairly compensated. An individual enters into a contract with an insurance company that requires the payment of death benefits to a third party. Estate creation B. As per the policy, if the insured causes damage to the third party, they can raise an. What Are the Main Types of Home Insurance? Third-Party Beneficiary: Meaning and Rights - Investopedia A. The insurer B. What Is Third-Party Insurance? | U.S. News The plan must be communicated to all employees C. The plan must be fore the exclusive benefits of the employees and their beneficiaries D. The plan must be permanent, written and legally binding, A. third-party beneficiary | Wex | US Law | LII / Legal Information He is a Chartered Market Technician (CMT). Which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated? Operational costs are reduced, compliance is enhanced, and tax and investor reporting improve. An individual not covered by an employer-sponsored pan who has earned income, For a retirement plan to be qualified, it must be designed for the benefit of A. The annuity plan is A. Company invoices or initial customer contracts typically state at which time a collection agency may be used for securing outstanding payments. In the case of third party debt collection, the third party sides with the lender to recover as much of the outstanding debt as possible and is incentivized accordingly. As it is an accident case, the insurance company will require you to have a charge sheet. A. The policy can be converted to an individual term insurance policy C. The cost of coverage is based on the ration of men and women in the group D. The premiums are higher than in an individual policy because there is no medical exam, C. The cost of coverage is based on the ratio of men and women in the group, Under a SIMPLE plan, which of the following is TRUE regarding taxation on both contributions and earnings? It is essential for businesses as it protects them from lawsuits when someone gets injured in their establishment or events.

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