Lisa Does Not Want Her Life Insurance Policy Included in Her

question 40

Multiple Choice

Lisa does not want her life insurance policy included in her gross estate when she dies.Lisa can remove the life insurance policy from her estate if she does which of the following more than 3 years before she dies?

• A)borrow the cash value of the policy
• B)make an absolute assignment of the policy to someone else
• C)change the beneficiary to someone who does not have insurable interest
• D)select a lump sum settlement option and name her estate the beneficiary

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Definitions:

Right of First Refusal

A contractual right that gives its holder the option to enter into a business transaction with the owner of something, before the owner is entitled to enter into that transaction with a third party.

Option Agreement

An agreement that gives a party the option, but not the obligation, to buy or sell an asset at a predetermined price and date.

Buy-and-Sell Agreement

A legally binding agreement between co-owners that outlines the procedure for the redistribution of shares of a departing owner, often used in partnerships and close corporations.

Transfer Restriction

Legal limitations placed on the transferability of securities or other assets, which may require certain conditions to be met before transfer can occur.