Business Disability Insurance 2020

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Question 1 of 6

1. Question
Pedro is a very valuable employee of a high tech company. Pedro’s employer has purchased an insurance policy that will pay a benefit to the employer if Pedro becomes injured or ill and unable to work. This type of insurance is described as what?
- Key employee disability income
- Disability buy-sell
- Business overhead expense (BOE)
- Workers compensation
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Question 2 of 6

2. Question
Which of the following is a legal contract between the owners of a business, specifying what will happen if one of the owners dies or becomes disabled and unable to work?
- Buy-sell agreement
- Key employee agreement
- Business overhead agreement
- Residual disability agreement
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Question 3 of 6

3. Question
What is the main purpose of a buy-sell agreement?
- To allow an insurance company to provide customers with evidence that the insurer has obtained a certificate of authority from the state insurance department to sell disability insurance
- To allow the remaining owner(s) of the business to purchase the portion of the business owned by the person who is no longer able to continue in the business
- To help protect a business against financial loss if an important (key) employee becomes injured or ill and unable to work
- To define the length of time (such as 30, 60, or 90 days) that the insured must wait after he or she has become disabled, before becoming eligible for benefits under the policy.
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Question 4 of 6

4. Question
Business overhead expense (BOE) insurance does NOT pay for what?
- Employee salaries
- Office rent and utilities
- Disabled owner's salary
- Office expenses
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Question 5 of 6

5. Question
Which of the following statements is NOT true about business overhead expense (BOE) insurance?
- It can pay for business expenses incurred during the disability. This allows the business to “keep the lights on” and stay in business while the owner is disabled.
- It can pay for the disabled owner’s salary.
- It can pay for expenses such as office rent, utilities, accounting, legal, and other professional fees.
- These policies pay the actual amount of covered expenses—up to the monthly policy benefit limit.
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Question 6 of 6

6. Question
Which of the following statements is NOT true about key employee disability income insurance?
- The key employee is the insured.
- The key employee is the policyowner and pays the premium.
- The business (employer) is the beneficiary of the policy.
- The business (employer) does not receive a tax deduction for the premiums paid; benefits received by the business are not taxable income.
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Business Disability Insurance 2020

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