MTHEL131 Lecture Notes - Lecture 8: Life Insurance, Crisscross, Munich Re
12 Apr 2016
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Richard marin was insuring life of a key person. Business uses of insurance: key person insurance, provide funding for buy-sell agreements. 10 years later the business was valued at million. Bob, sally"s husband, wants to sell sally"s porion. Jane said she"d try to raise money to buy shares. Not sure how business will do because of sally"s death. Jane can"t ind any other source for money. To deal with this situaion: have jane purchase life insurance policy on sally"s life (life insured) and jane is the beneiciary. Also, sally owns a life insurance policy on jane"s life (life insured) and. Policy also states that the husband/inheritor must sell the shares to the survivor: paid-up addiions might be good idea to have for this agreement. The insurance sill has to be there: 1) death: surviving partner will buy shares of deceased partner, 2) disability: ater certain period of ime, the healthy partner purchases shares of disabled partner.
