California Insurance License Exam Practice Test Practice Question
Key person disability insurance is primarily used to
Correct Answer: D
Rationale: Key person disability insurance is designed to safeguard a business from financial losses that may arise due to the unexpected disability of a crucial employee. This coverage ensures that the business can maintain operations and mitigate risks associated with the absence of that key individual.
Option A, funding the blackout period, relates to life insurance benefits rather than disability coverage. Option B, creating an immediate estate, pertains to estate planning, not disability insurance. Option C focuses on protecting lenders against borrower death, which is not relevant to disability insurance. Thus, option D accurately reflects the purpose of this insurance.
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