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A partnership buy-sell agreement in which each partner purchases insurance on the life of each of the other partners is called a?

A) split-dollar plan.
B) key person plan.
C) cross purchase plan.
D) deferred buy-sell plan.

User Bijli
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1 Answer

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Final answer:

A cross purchase plan is a type of buy-sell agreement where each partner holds a life insurance policy on the others, using the proceeds to buy the deceased partner's business share.

Step-by-step explanation:

The partnership buy-sell agreement in which each partner purchases insurance on the life of each of the other partners is called a cross purchase plan. In such an arrangement, each partner holds a life insurance policy on the other partners, and in the event of a partner’s death, the proceeds from the life insurance policy are used to purchase the deceased partner's interest in the business. This ensures that the business can continue operating with minimal financial disruption, and the remaining partners can retain control of the business.

User Fatemeh Jabbari
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