QuestionJune 25, 2025

94. What type of disability policy covers a fixed period of time and provides funds for long-term commitments if an owner or key employee of a business is disabled? A. Reducing term disability coverage B. Key person disability coverage C. Business overhead expense coverage D. Disability buy-out coverage

94. What type of disability policy covers a fixed period of time and provides funds for long-term commitments if an owner or key employee of a business is disabled? A. Reducing term disability coverage B. Key person disability coverage C. Business overhead expense coverage D. Disability buy-out coverage
94. What type of disability policy covers a fixed
period of time and provides funds for long-term
commitments if an owner or key employee of a
business is disabled?
A. Reducing term disability coverage
B. Key person disability coverage
C. Business overhead expense coverage
D. Disability buy-out coverage

Solution
4.1(264 votes)

Answer

D. Disability buy-out coverage Explanation 1. Identify the policy type The question asks for a disability policy that covers a fixed period and provides funds for long-term commitments if an owner or key employee is disabled. 2. Match description with options A. Reducing term disability coverage typically decreases over time, not matching the requirement. B. Key person disability coverage provides funds if a key employee is disabled, but does not focus on long-term commitments. C. Business overhead expense coverage covers business expenses, not long-term commitments. D. Disability buy-out coverage provides funds for buying out ownership interests in case of disability, aligning with long-term commitments.

Explanation

1. Identify the policy type<br /> The question asks for a disability policy that covers a fixed period and provides funds for long-term commitments if an owner or key employee is disabled.<br /><br />2. Match description with options<br /> A. Reducing term disability coverage typically decreases over time, not matching the requirement.<br /> B. Key person disability coverage provides funds if a key employee is disabled, but does not focus on long-term commitments.<br /> C. Business overhead expense coverage covers business expenses, not long-term commitments.<br /> D. Disability buy-out coverage provides funds for buying out ownership interests in case of disability, aligning with long-term commitments.
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