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To provide funds to pay to the retiring partner or to the representatives of a deceased partner, generally partners:
- a)Create a Sinking Fund
- b)Create Joint Life Policy
- c)Create Reserve Fund
- d)Create a separate Bank Account
Correct answer is option 'B'. Can you explain this answer?
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To provide funds to pay to the retiring partner or to the representati...
Joint Life Policy as a means of providing funds to retiring or deceased partners:
A Joint Life Policy is an insurance policy taken out on the lives of two or more partners, where the sum assured becomes payable on the death of one of the partners. This policy is often used by partnerships as a means of providing funds to pay out a retiring partner or to the representatives of a deceased partner.
Advantages of a Joint Life Policy:
1. Provides funds for payment to retiring or deceased partners: The sum assured under the Joint Life Policy becomes payable on the death of one of the partners. This ensures that there are funds available to pay out the retiring partner or the representatives of a deceased partner.
2. Premiums are tax-deductible: The premiums paid for the Joint Life Policy are tax-deductible expenses for the partnership.
3. Easy to set up: Setting up a Joint Life Policy is a simple process and can be done through an insurance broker.
4. Flexibility: The sum assured and the premium can be adjusted to suit the needs of the partnership.
5. Provides financial security: The Joint Life Policy provides financial security to the partners and their families in the event of the death of one of the partners.
Conclusion:
A Joint Life Policy is an effective means of providing funds to pay out a retiring partner or the representatives of a deceased partner. It provides financial security to the partners and their families and is a tax-deductible expense for the partnership.
A Joint Life Policy is an insurance policy taken out on the lives of two or more partners, where the sum assured becomes payable on the death of one of the partners. This policy is often used by partnerships as a means of providing funds to pay out a retiring partner or to the representatives of a deceased partner.
Advantages of a Joint Life Policy:
1. Provides funds for payment to retiring or deceased partners: The sum assured under the Joint Life Policy becomes payable on the death of one of the partners. This ensures that there are funds available to pay out the retiring partner or the representatives of a deceased partner.
2. Premiums are tax-deductible: The premiums paid for the Joint Life Policy are tax-deductible expenses for the partnership.
3. Easy to set up: Setting up a Joint Life Policy is a simple process and can be done through an insurance broker.
4. Flexibility: The sum assured and the premium can be adjusted to suit the needs of the partnership.
5. Provides financial security: The Joint Life Policy provides financial security to the partners and their families in the event of the death of one of the partners.
Conclusion:
A Joint Life Policy is an effective means of providing funds to pay out a retiring partner or the representatives of a deceased partner. It provides financial security to the partners and their families and is a tax-deductible expense for the partnership.
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To provide funds to pay to the retiring partner or to the representatives of a deceased partner, generally partners:a)Create a Sinking Fundb)Create Joint Life Policyc)Create Reserve Fundd)Create a separate Bank AccountCorrect answer is option 'B'. Can you explain this answer?
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