Question

Three individuals form a partnership with equal shares valued at $300,000. If they were persuaded to use an "entity" buy-sell plan funded with life insurance, how many policies and for what amounts would be purchased?

A) Three policies for $200,000 each.
B) Three policies for $100,000 each.
C) Six policies for $50,000 each.
D) One policy for $100,000.

Answer 1

Three policies for $100,000 each.

Step-by-step explanation:

If three individuals form a partnership with equal shares valued at $300,000 and they are persuaded to use an 'entity' buy-sell plan funded with life insurance, the number and amounts of policies purchased will depend on the value assigned to each share. Let's assume each share is worth $100,000.

In this case, the answer would be B) Three policies for $100,000 each. Each partner would purchase a policy for $100,000, covering their share of the partnership. This would provide financial protection for the partners in case of death.