Question

Why is it easier to evaluate the value of a key person with a good earnings trend?

a.

Because it is easier to predict future earnings

b.

Because it is easier to assess the potential financial loss to the company

c.

Because it indicates that the key person's contribution to the company is significant

d.

None of the above

Posted under IC22 Life Insurance Underwriting

Answer: (c).Because it indicates that the key person's contribution to the company is significant Explanation:A good earnings trend indicates that the key person's contribution to the company is valuable, and therefore, the potential financial loss to the company on the death of the key person would be significant. This makes it easier to evaluate the value of a key person with a good earnings trend.

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