Funding Buy-Sell Agreements With Life Insurance


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Which of the following is a disadvantage to life insurance as a funding option for a buy-sell agreement?

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1. You are thinking of funding a buy-sell agreement with a partner. However, her share of ownership will be nearly 70%. Which of the following scenarios is possible with this arrangement?

2. Your business partner has passed away. Which of the following is true regarding the proceeds of a buy-sell agreement funded by life insurance?

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About This Quiz & Worksheet

The questions contained in this short multiple-choice quiz will test your knowledge of insurance and buy-sell agreements. The quiz is scored automatically and can be taken multiple times.

Quiz & Worksheet Goals

You'll be tested on the following topics:

  • Disadvantage to life insurance as a buy-sell agreement funding option
  • Options when your partner's share of a buy-sell agreement is higher
  • Proceeds of a buy-sell agreement funded by life insurance when a business partner dies
  • When to go through life insurance in a buy-sell agreement for a business
  • Type of agreement where a business owner buys life insurance policies for co-owners

Skills Practiced

  • Knowledge application - use your knowledge to answer questions about insurance and buy-sell agreements
  • Information recall - access the knowledge you've gained regarding what happens to a life-insurance-funded buy-sell agreement when a business partner dies
  • Interpreting information - verify that you can read information regarding life insurance policies for business co-owners and interpret it correctly

Additional Learning

To take an even closer look at this topic, review the related lesson titled Funding Buy-Sell Agreements With Life Insurance. This lesson covers the following:

  • Setting up a buy-sell agreement
  • Entity and cross purchases
  • Advantages to funding with life insurance