BU483 Lecture Notes - Lecture 7: Life Insurance, Crisscross
Document Summary
Solves 3 issues: death, disability, dispute. Used to help sort out issues if a partner of a business dies. Allows partner to buy out shares of deceased. With dispute, partner has option to accept or reject offer. If partner rejects the initial offer, they can counter with the same offer and the initiator must accept that offer. If funds are an issue with relation to buy-out, partners can take out life insurance policies on each other for the amount required to buy the other out in case of death. Life insurance policy for a key member of a company. Risks include aids, heart disease, suicide, smoking, cancer, etc. Can send applicant to doctor if need be. Despite all the guidelines and regulations, most people get insurance. Standard policy issued, coverage granted as quoted (75%) Sub-standard (rated) policy allows coverage for the person, however insurer will ask for higher premiums.
