Question

What is the maximum amount of keyman insurance that can be granted to a company?

a.

3 times the average gross profit of the company for the last three years

b.

5 times the average net profit of the company for the last three years

c.

10 times the total annual compensation package for the keyman

d.

The minimum of the amount arrived at on the basis of the above three methods

Posted under IC22 Life Insurance Underwriting

Answer: (d).The minimum of the amount arrived at on the basis of the above three methods Explanation:The total permissible amount of keyman insurance for a company will be the minimum of the amount arrived at on the basis of the three guidelines provided: 3 times the average gross profit of the company for the last three years, 5 times the average net profit of the company for the last three years, 10 times the total annual compensation package for the keyman.

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