Question

2 raziya is the sole shareholder of a business that operates a café downtown that opened up a little over a year ago. although the café did not make a profit in its first year, things are picking up and raziya is confident that the café will be profitable by the end of this year. in order to buy the necessary equipment for the café, the company took a 10 - year $100,000 loan from the bank. there are six employees in total: five that serve the clients and raziya who is responsible for the entire operation of the café. as such, she recognizes the fact that if she were unable to work due to illness or injury, the café would be in trouble and it would be difficult to make the loan payments. therefore, raziya wants her company to purchase business loan protection disability insurance.
why will the company not be able to purchase business loan protection disability insurance?
a2rvdtiwdytyefledwdycna0ngpudz09
a. business loan protection disability insurance is not available for incorporated businesses.
b. the business does not have a history of generating profits.
c. the business is not dependent on raziya’s good health.
d. the loan was not undertaken for the purpose of earning income from the property.
a2rvdtiwdytyefledwdycna0ngpudz09

Explanation:

The problem states the café did not make a profit in its first year and Raziyais confident it will be profitable by the end of this year (implying no prior profit history). Business loan protection disability insurance typically requires a business to have a track record of profitability to qualify, as insurers assess the business’s ability to sustain loan payments normally. The other options are incorrect: there’s no indication the business is incorporated (a is unsubstantiated), the business is dependent on Raziya’s health (c contradicts the text), and the loan was for equipment to operate the café (d is false). Thus, the lack of profit history is the reason.

Answer:

b. The business does not have a history of generating profits.